Sterling suffered a setback yesterday as the Office for National Statistics released their second GDP estimate figures
Sterling / Euro and US Dollar exchange rates
Sterling suffered a setback yesterday as the Office for National Statistics released their second GDP estimate figures showing that the economy contracted by more than was first expected in the first three months of 2012. A shipload of strong economic data at the beginning of the year had caused many in the country to speculate that the preliminary figure would be upgraded, but yesterday’s release showing a decline of -0.3% made it clear that that argument has ran its course.
However the Pound was not heavily punished by investors; it lost out on half a cent against the US Dollar and Kiwi Dollar, but traded within a tight range against the Euro, the Yen, the South African Rand, the Aussie Dollar, and the Canadian Dollar. The interbank Pound to Euro exchange rate is currently trading at 1.2465 whilst the Sterling to US Dollar interbank rate is 1.5672.
The US dollar suffered a slight blip as Durable Goods Orders disappointed once more. The figure improved from last month’s -3.7% decline, but only managed a rebound to 0.2%. The Buck did not take the soft print to heart and managed to benefit from its position as a safe haven from the uncertainty surrounding the global economy. Disappointing PMI results from China and the Eurozone reinforced the fact that we are still some way away from flowering like poppy seeds from the devastation of the worldwide financial crisis-scape.
Shares in Spanish lender Bankia have been suspended “due to circumstances that may affect the normal share trading,” according to the Spanish stock market regulator CMV. Rumours have surfaced suggesting that Bankia will require a further 15 billion Euros form the government. The fragile bank is a symbol of Spain’s brittle banking sector, which has failed to recover from huge losses as a result of the 2008 housing bust, and is now considered the second largest threat to the future of the Eurozone after Greece.
Euro / US Dollar
The Euro fell to a two-year low against the US Dollar yesterday of 1.2517, as the situation in Greece continues to spook investors into flights of safety across the pond. Arguments between European political leaders have done nothing to subdue the atmosphere of anxiety, as the 18th set of crisis talks past with no real outcome or defined conclusions.
Alexis Tsipras, leader of the leftwing coalition bloc SYRIZA, described the battle between Greece and Europe as akin to the Cold War. He believes that neither side will ‘push the button’ through rational fear of the nuclear winter which could ensue if Greece were to exit the single-currency. His comments contradict the vast majority of Eurozone leaders who have previously described Greece’s membership within the Eurozone as impossible without the introduction of the prescribed austerity measures.
Data Released Today
German Consumer Confidence Survey (June)
University of Michigan Confidence (May)
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