The Euro gained support against the U.S Dollar yesterday from Greece’s parliamentary approval for the second loan package, although it was largely considered a formality.
Sterling / Euro and US Dollar exchange rates
The Pound declined against all of the 16 most actively traded currencies in early trading yesterday, falling through 1.1950 versus the Euro and 1.5850 against the US Dollar, after the release of the Bank of England minutes for the March announcement. The market was anticipating a unanimous vote to keep interest rates and bond purchases unchanged this month but the voting pattern revealed that two policy makers broke rank and voted to implement additional stimulus measures.
Policy maker Adam Posen, who has adopted a very bearish stance in recent months, voted for a further £25 billion this month and was joined by David Miles. The rest of the nine strong committee preferred to adopt a wait-and-see approach and see how the economy would react to the recent injection of stimulus. The result of the report has rocked the Pound and the UK currency has also slipped back towards 1.50 versus the Australian Dollar, as the prospect of further QE by May has increased.
The Pound challenged resistance levels in the region of 1.59 against the U.S Dollar yesterday, but was subjected to significant selling pressure through the course of the day. The latest government borrowing data was much weaker-than-expected with a requirement of £12.9 billion, from a revised surplus of £10.9 billion the previous month.
The data increased a sense of unease over the medium-term outlook and also maintained pressure on the government to tackle the deficit before the UK loses its AAA credit rating. The Chancellor’s budget was broadly in line with expectations in economic terms with the OBR revising its GDP forecasts slightly higher.
The overall stance continued to show that the government had very little room for manoeuvre but with no immediate implications for the credit rating, the Pound edged higher last night. However, Sterling has come under immediate selling pressure this morning, after a report from the Office of National Statistics showed that UK retail sales fell by more than expected in February.
Euro / US Dollar
The Euro gained support against the U.S Dollar yesterday from Greece’s parliamentary approval for the second loan package, although it was largely considered a formality. The single currency was unable to sustain its momentum and dipped back towards 1.32 last night. There was speculation that the German government was putting pressure on the ECB to come up with a cohesive plan to effectively end the debt crisis.
There were also further concerns surrounding Spain and the ongoing threat of a default within the nation. The lack of confidence surrounding Spain was illustrated with an increase in Spanish and Italian bond yields, which triggered a decline in the Euro on concerns the crisis will escalate again. In the U.S, the Dollar is gaining and losing on swings in risk sentiment but in terms of economic data, the existing home sales figures showed a marginally weaker result for February.
Data Released Today
U.K 09:30 – Retail Sales (February)
EU 10:00 – Industrial Orders (January)
U.S 12:30 – Initial Jobless Claims (w/e 17th March)
U.S 14:00 – Leading Indicators (February)
EU 15:00 – Flash Consumer Confidence (March)
- Sterling, Euro and US Dollar exchange rate news – The Pound declined heavily against all of the 16 most actively traded currencies yesterday
- Foreign Currency Exchange Rate Forecast – The Pound declined against all of the 16 most actively traded currencies
- Pound, Euro US Dollar Currency News – The Pound declined against all of the 16 most actively traded currencies
- Daily Foreign Exchange Rate Forecast – Pound declined heavily against all of the 16 most actively traded currencies
- Pound Sterling, the Euro and US Dollar exchange rate news flash – The Pound remained lower against the majority of the 16 most actively traded currencies