The Pound declined by around 0.5 cents against the Euro.
Please find below today’s update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements.
• Fed stimulus likely according to Jackson Hole – Sterling-positive.
• ECB hopes still unconfirmed – damaging for Euro.
• US data will determine QE3 – US Non-farm data vital.
• Antipodeans fall vs. Sterling – Aug 7th reversal continues.
The Jackson Hole Symposium took centre stage on Friday with a vastly important speech from Federal Reserve Chairman Ben Bernanke heading the bill. However Andy Haldane of the Bank of England also gave a presentation, of a more progressive nature, in which he compared the ‘catching’ of the financial crisis to a dog catching a frisbee. His main argument built on the idea that to accurately analyse “the complex array of physical and atmospheric factors” required to catch a frisbee would be a time-wasting exercise and, that in some ways, ‘the complex regulation developed over recent decades’ could be damaging to crisis control efforts.
Haldane’s assertion, that simple economic frameworks could be more productive than complicated instruments, seems like a step in the right direction and could be set to “underpin the Bank of England’s new supervisory model” which comes into practise next year.
In more concrete news the GfK Consumer Confidence survey remained weak, at -29, in August suggesting little sign of a boost from the Olympic Games. However a survey from Nationwide showed that UK House Prices surged by the most during August in over 2.5 years.
The Pound declined by around 0.5 cents against the Euro during the morning, as hopes of European Central Bank intervention in the bond market during September heated up, but clawed back its losses in the aftermath of Bernanke’s speech as Spanish 10-year yields approached the unsustainable 7.0% level once again.
In terms of economic data the single currency was treated to a stronger-than-expected Consumer Price Index figure of 2.6%, but damaged by falling German Retail Sales (-1.0%) and rising Italian Unemployment (10.6%).
Sterling increased by over 0.8 cents against the US Dollar on Friday, to approach 3-month highs above the 1.5900 mark, as Fed Chairman Ben Bernanke’s mildly-dovish speech was taken by investors to suggest that QE3 will be forthcoming in the United States.
Bernanke’s speech concluded that “non-traditional policy tools have been and continue to be effective in providing financial accommodation,” which, without explicitly announcing it, heavily suggested that a third round of asset purchases are on the way. This allowed the Pound to appreciate against the US Dollar. Sterling’s gains were curtailed by strong resistance above 1.5900, but could be set to increase more potently if, and when, the Fed makes the official QE announcement.
On Friday the Pound rose against the Canadian Dollar, during the morning, in anticipation of a cooling monthly GDP figure of 0.1% for June. However the growth stat printed at a better-than-expected 0.2% which allowed the Canadian Dollar to increase in value by 0.5 cents within a couple of hours. The quarterly improvement of 1.8% for the Canadian economy, combined with a larger likelihood of Fed stimulus, sent the ‘Loonie’ higher against the Pound over the remainder of the day.
The Pound is currently trading 1.3 cents higher against the Australian Dollar than Friday’s opening levels, as the currency pair’s reversal in fortune continues. Since August the 7th Sterling has surged by around 7 cents against the ‘Aussie’ and with GDP figures and interest rate announcements set to weigh over the Australian Dollar in the coming week the trend is unlikely to stop.
New Zealand Dollar
Despite the Federal Reserve stoking stimulus hopes with cautious tones, the commodity-correlated ‘Kiwi’ Dollar was left unsupported by falling Iron ore prices, negative Japanese inflation, and an overarching concern of cooling related to the Chinese economy. Subsequently the Pound to New Zealand Dollar exchange rate has increased by 1.2 cents since Friday morning.
Data Released Today
03:30 CNY HSBC Manufacturing PMI (AUG)
08:55 EUR German Purchasing Manager Index Manufacturing (AUG F)
09:00 EUR Euro-Zone Purchasing Manager Index Manufacturing (AUG F)
09:30 GBP Purchasing Manager Index Manufacturing (AUG)
- Pound to Euro, US Dollar exchange rate: The Euro managed to appreciate by around 0.4 cents against the Pound
- Pound to Euro, US Dollar exchange rate: The Pound lost out on 0.4 cents against the US Dollar
- Pound to Euro, US Dollar exchange rate: A strong Spanish debt auction sent the Pound to Euro exchange rate down by around 0.5 cents yesterday
- Pound to Euro Exchange Rate Forecast: The Pound has declined by around 2.5 cents against the Euro
- Pound to Euro, US Dollar exchange rate: The Pound broke back above 1.2600 against the Euro