The Pound was treated to a nice surprise yesterday morning as the UK second quarter growth figures were revised upwards from -0.5% to a very-slightly-better -0.4%.
• UK GDP revised upwards – from -0.5% to -0.4%.
• 2013 Spanish Budget released – banking sector improvements Euro-positive.
• US GDP declines – revised down from 1.7% to 1.3%.
• US Durable Goods Orders plummet – Orders down to -13.2%.
The Pound was treated to a nice surprise yesterday morning as the UK second quarter growth figures were revised upwards from -0.5% to a very-slightly-better -0.4%. However, in comparison to the dreadful original result of -0.7%, the new figure suggests that the economic climate in Britain is not as awful as some economists had proclaimed.
Although the GDP figures painted a slightly more optimistic picture of the UK economy, a separate release scattered negativity all over the British financial scene; the UK Current Account fell to -£20.8 billion during the second quarter, marking the largest Q2 deficit since records began.
The Euro suffered from some weak data during the morning; the European Commissions Economic Sentiment figure fell from 86.1 to 85.0, the EC’s Business Climate index fell to a 3-year low, and Consumer Sentiment dropped from -24.6 to -25.9. This slew of soft Eurozone economic data combined with the slightly better-than-expected UK GDP figures caused the Pound to grow by around 0.6 cents against the Euro, to a 3-week high of 1.2620.
However Sterling’s gains against the Euro were restricted to around 0.15 cents on the day, in response to the Spanish budget for 2013. The new budget, which was approved yesterday, and announced in the afternoon, proved positive for the single currency as it suggested that the Spanish government is trying to tackle its banking crisis internally, rather than by requesting exterior help. The key change was that Mariano Rajoy’s government will tap into the nation’s pension reserve fund in order to bolster Spain’s struggling financial sector. GBP/EUR fell to around 1.2570 after the budget was announced.
In terms of fundamental data, yesterday was an absolutely dreadful day for the US economy; the annualised Q2 Gross Domestic Product figure was significantly downgraded from 1.7% to 1.3% as consumption plummeted and August’s Durable Goods Orders figure missed analysts’ expectations by a massive 8.2%. US Durable Goods Orders were predicted to post a pessimistic score of -5.0%, but the actual result fell to a disastrous -13.2% – the worst drop in output since January 2009. Subsequently the Pound managed to post a daily gain of around 0.7 cents against the US Dollar.
Sterling grew to an 88-day high of 1.5990 yesterday in response to the extremely soft US data. With US GDP falling, and US Durable Goods Orders plunging, sentiment towards the Canadian Dollar declined due to the very strong trade relationship between the two nations. However the Pound’s 0.8 cent rally was reversed during the afternoon as the Spanish budget supported risk sentiment, and the value of gold – one of Canada’s largest exports – hit a 7-month high, which supported the commodity-correlated Canadian Dollar.
It seems that ‘Aussie’ Dollar investors have been reacting more decisively to the 2013 Spanish budget announcement than to the dismal US data over the past 24 hours. The Australian Dollar appreciated by over 1.5 cents against the Pound yesterday as optimism from Spain combined with the news that government statisticians have uncovered around A$325 billion (£200 billion) of share assets that were previously unrecognised reflected favorably on the Antipodean Currency.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate declined by around 0.8 cents yesterday on speculation that the Chinese government may take action in the form of monetary stimulus to improve its economy. China is the main driver of economic activity in the Asia-Pacific region and positive developments from the nation are generally interpreted as optimistic for the New Zealand Dollar as well.
Data Released Today
06:00 EUR German Retail Sales (YoY) (AUG)
12:30 CAD Gross Domestic Product (YoY) (JUL)
12:30 USD Personal Consumption Expenditure Core (YoY) (AUG)
13:55 USD U. of Michigan Confidence (SEP F)
- Pound to Euro, US Dollar exchange rate: The UK economy was treated to another positive boost
- The Pound failed to breach the 1.6300 mark again yesterday
- 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, US Dollar exchange rate: The Pound remained relatively stable yesterday
- Pound to Euro, US Dollar exchange rate: The Bank of England surprised absolutely nobody yesterday as they kept their benchmark interest rate at 0.5%