The table below shows the percentage movement of exchange rates yesterday, along with the extra currency you could have bought if buying with £200,000.
|Currency Pair||% Change||Difference on £200,000|
- Euro Strength on EU Data
- UK Inflation Today
- USD, AUD and NZD Focus
Euro Strength on EU Data
The pound took sizeable losses against the Euro yesterday whilst making small inroads against the US dollar on what was a particularly quiet day with little out in the way of data to drive the markets. There was however a couple of small releases which helped support Euro exchange rates. Wholesale prices in Germany came in better than expected suggesting more retail activity and consumption which is good for the Eurozone, whilst Gross Domestic Product (GDP) numbers for Greece, although very weak, did show signs of improvement. Greek GDP has been running as low as -6.5% so the improvement to -6.2% does offer the smallest bit of hope and it is also the first bit of good news they have had for some time!
To add to this, Spanish 10 year bond prices fell dramatically in a sign of confidence just as Italy had a successful bond sale. This morning sees the release of European Gross Domestic Product (GDP) figures for France, Germany, Portugal and Spain are and should be keenly eyed for Euro exchange rates today. EU GDP as a whole is expected to contract to -0.2% which will be a sharp fall from the previous quarter of +0.9%. The figures are released at 10:00.
UK Inflation Today
UK inflation numbers (Consumer Price Index) are released this morning at 09:30 and should create some market volatility for the pound. Forecast is for a small drop to 2.3% in July down from 2.4% in June. Although the price of oil hit a three month high yesterday there had been a general decline which should be reflected in the numbers. Considering Mervyn King cut the UK growth forecast last week, the Bank of England will be looking for an opportunity to take action with more quantitative easing (QE) once again. A weaker inflation number would allow more QE to ahead and rates could slide back down to the 1.24 / 1.25 levels. First this morning saw house prices slide the most for a year as per RICS which although not a huge market mover does still set the tone for a gloomy UK outlook. The Bank of England minutes are also released tomorrow morning and should give added clues as to where the pound is heading.
USD, AUD and NZD Focus
The pound saw a flatter day against the US dollar but held steady at the 1.57 level having just broken a two week high, bearing in mind there was no US data out. US Producer Price Index data and retail sales numbers should hopefully create some movement for the dollar this afternoon.
The pound made excellent gains against both the Australian and New Zealand dollars yesterday although this was more to do with economic growth concerns after weaker Japanese GDP numbers came in at 0.3% against forecast of 0.6%.
The Australian dollar has generally benefitted from added demand for Australian government bonds although the weaker Japanese numbers have dented confidence elsewhere and hence the sudden weakness in these currencies. The movement back towards the 1.50 level is welcome news for anyone buying Aussie dollars as these recent lows have been punishing for buyers needing to make money transfers.
There is also a fair chance the Reserve Bank of Australia will cut interest rates at some stage which should see added dollar weakness although it does not appear we are at that stage yet anc hence we should see a little bit more from the GBP AUD rally breaking over the 1.50 mark.
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