Currency News: UK daily forex news

GBP USD Rate Gains On Draghi Comments, GBP AUD & GBP NZD Also Up

Ben Hughes — Fri, 24 May 2013 14:00:00 +0100

It’s been a firmly ‘risk-off’ trading environment so far today in the global currency markets as investors steer clear of currencies with a high correlation to stocks. The big loser on the day so far has been the Canadian Dollar, causing the Pound to Canadian Dollar exchange rate (currency : GBP CAD) to accumulate by almost half of a percentage point to 1.5665 earlier. The Canadian tender has been particularly hard hit since the middle part of the week thanks to the publication of data in China which showed that activity levels in the nation’s key manufacturing sector are slowing. This, coupled with the continued easing of global crude oil prices, has made market participants reluctant to hold the Canadian tender.

With the major volume of the day about to start flowing in the markets as New York opens for business, it would appear highly possible that the flight to safety which has marked this morning’s European session will be continued in North America. If this proves to be the case, then expect further upside for the Pound to Australian Dollar exchange rate (currency : GBP AUD) and the Pound to New Zealand Dollar exchange rate (currency : GBP NZD).

Elsewhere, last night brought a rare piece of positive news for the beleaguered British economy. European Central Bank President Mario Draghi spoke in positive terms of the UK economy during his visit to London, stating that he has noted "encouraging signs of tangible improvements" in Britain’s economic situation. Draghi’s words may cause the Pound Sterling to gain support in coming sessions. The Pound has registered healthy gains against the US Dollar following Draghi’s words, sending the Pound to US Dollar exchange rate (currency : GBP USD) up to as high as 1.5135 earlier. It would appear that, in spite of this week’s disappointing April UK Retail Sales numbers, there may be further upside to come for Cable in the near-term.

GBP EUR Exchange Rate Down, GBP AUD & GBP NZD Climb

Minesh Chaudhari — Fri, 24 May 2013 10:00:00 +0100

Last night’s Asian equities session brought a return to something approaching normal service – Tokyo’s benchmark Nikkei 225 index, which had plummeted by over 7% during Thursday trading, provided evidence of this. Japan’s leading equities exchange closed up by 0.89%, suggesting that market participants had recovered their nerve following the dismal Chinese HSBC Manufacturing PMI survey, published during the early part of Thursday’s session, which revealed that the key sector of the world’s second largest economy had contracted in April for the first time in seven months.

Up to this point in the trading day, the US Dollar has performed relatively strongly, sending the Pound to US Dollar exchange rate (currency : GBP USD) back down below the 1.5100 threshold – Cable is currently trading at 1.5088. In spite of the limited recovery for Asian equities, risk appetite still appears to be in short supply amongst investors, as evidenced by an easing in the relative levels of the Australian and New Zealand Dollars which has send the Pound to Australian Dollar (currency : GBP AUD) exchange rate up as high as 1.5620 and the Pound to new Zealand Dollar exchange rate (currency : GBP NZD) up to 1.8685. Last night’s domestic Trade Balance data for last month has been an additional factor weighing down the Kiwi Dollar. The latest import/export figures showed a monthly surplus of only NZD157m versus analysts’ expectations of a showing of NZD480m. The evidence that the historically strong value of the New Zealand Dollar in recent months is increasingly holding back the Antipodean nation’s economy is mounting. With this in mind, further losses could be possible for the kiwi in the near term.

Elsewhere, the euro has held its ground so far today and the pound to euro exchange rate (currency : GBP EUR) remains tucked in below the 1.1700 level. This morning’s German GDP data for Q1 printed exactly as per expectations and the single currency has enjoyed a small relief rally as a result.

Foreign Currency Exchange Rate Forecast For GBP EUR And Outlook For AUD USD

John Cameron — Thu, 23 May 2013 14:00:00 +0100

The POUND STERLING started the day off on a firm footing, but has subsequently leaked support. This morning’s revised UK GDP data for Q1 confirmed the Office of National Statistic’s initial growth estimates for the first three months of this year were accurate. This left investors to concentrate on this week’s Sterling-negative UK inflation and retail sales numbers. The outlook for the Pound is NEUTRAL TO NEGATIVE.

The EURO has had a middling day so far today following a weak set of German Manufacturing and Services sector data. The news that Spain’s debt-saddled administration managed to shift a larger than anticipated allocation of government bonds this morning offset the bad news from Germany. The current GBP EUR exchange rate is 1.1703 and the single currency is expected to trade with a NEUTRAL TO NEGATIVE bias in the near-term.

The AUSTRALIAN DOLLAR has endured wild swings over the past 24hrs – last night’s Federal Reserve FOMC minutes revealed that the US central bank’s policymakers were considering a tapering down of their nation’s controversial Quantitative Easing programme as soon as next month. The news sent Asian equities participants ducking for cover, causing Tokyo’s Nikkei 225 to lose over 7% of its value on the session. This took the Aussie sharply lower in early trading today, but as investors’ nerves have settled in the middle part of the day, the Aussie has firmed. The AUD is expected to trade on a NEUTRAL footing moving forward and the current GBP AUD exchange rate is 1.5522.

The US DOLLAR has lost ground against Sterling today, sending the Pound to US Dollar exchange rate up as high as 1.5094 earlier. The Greenback appears to be suffering thanks to yesterday’s testimony to Congress from Ben Bernanke, which saw the Fed Chairman suggest that the American economy remains too fragile to countenance a tapering of Quantitative Easing. The forecast for the Buck is for NEUTRAL trading in the short term.

GBP USD Exchange Rate Falls, GBP AUD & GBP NZD Rates Gain

Ben Hughes — Thu, 23 May 2013 09:00:00 +0100

Price action in the global currency markets yesterday afternoon was determined by a public statement from the US Federal Reserve Chairman Ben Bernanke. The head of America’s central bank had some interesting comments to make which had an unexpected effect on price action for several of the world’s major currencies.

Bernanke was addressing Congress’s Joint Economic Committee and committee members were keen to learn his thoughts on the state of the real economy in the US. However, market participants were listening out for something altogether different. Investors were hanging on Bernanke’s every work for any indication on the future direction of the Fed’s monetary policy. Bernanke did not disappoint, informing Congressman that it was far too early to counsel a scaling down of America’s US$85bn per calendar month asset purchase scheme. However, the Fed Chairman went further than this, and put his full weight behind the highly controversial policy, stating that his Bank’s ultra-loose stance was providing ‘significant benefits’ to the American economy and without the crutch of low interest rates coupled with QE, the recovery in the US would be at risk of ‘slowing or ending’.

Economists had posited that a vote of confidence in QE from Bernanke yesterday would cause the US Dollar to weaken significantly. The laws of supply and demand dictate that by flooding the market with an asset, the value of that asset depreciates. With Bernanke giving no indication that the US$1bn+ per year scheme is going to be scaled down for the foreseeable future, it was a fair assumption that the Greenback would come under heavy selling pressure. However, in a perverse turn, the Buck actually strengthened following Bernanke’s words, sending the GBP USD exchange rate (currency : GBP USD) down to as low as 1.5015 by the middle part of the North American session.

It appears that the Fed Chairman’s comments triggered a flight to safety as investors feared the worse regarding the global recovery. The support for the USD evidenced the fact that, in a storm, the US Dollar is still considered to be the safest haven of all. The dip in global risk appetite had the additional effect of sending the Pound to Australian Dollar exchange rate (currency : GBP AUD) back into the middle 1.5500s and the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) through the 1.8600 level once again.

Pound euro exchange rate (GBP EUR) Slumps On Weak UK Retail Sales Data

David Woodsmith — Wed, 22 May 2013 14:00:00 +0100

The Pound Sterling has come under heavy selling pressure during this morning’s European session, thanks to a raft of disappointing UK data releases. The most prominent of these was last month’s British Retail Sales data which showed a surprise drop off of 1.3% compared with the previous month. Analysts had been anticipating an annualised print of 1.8% for the closely watched shop sales number – the result of only 0.2% sent investors scrambling to shift out of Sterling-denominated holdings.

The latest UK Public Sector Borrowing numbers, released at the same time as the Retail Sales figures, were hardly any more encouraging for the Pound, showing that the UK’s coalition government borrowed a net £6.3bn last month alone. To put a positive spin on this, as the politicians are wont to do, this was significantly lower than the £8.9bn borrowed in April 2012. However, the fact that the UK’s mammoth budget deficit still stands at over £1tn and rising is a fact which is likely to hamper both the Pound and the British economy for years to come.

As today’s session got underway, many commentators were anticipating that the main event for Sterling would come in the form of the minutes of the latest Bank of England monetary policy meeting. In the end, the memos of the Bank’s latest get-together proved to be a damp squib, revealing that nothing had significantly altered since last month. As per previously, only three members of the MPC, (including current Governor Mervyn King), had voted in favour of a £25bn increase to Quantitative Easing. Next month is King’s final policy meeting before he steps down as Governor, but it appears unlikely that he will sway the other eight members to vote for a further loosening of Britain’s monetary policy before he quits the role. The Pound to euro exchange rate (currency : GBP EUR) slumped to 1.1654 earlier, but losses for the British tender would surely have been greater were it not for the BoE minutes.

GBP USD, GBP AUD & GBP NZD Exchange Rate Forecasts Hang On Bernanke’s Words

James Fuller — Wed, 22 May 2013 09:00:00 +0100

Today’s session promises to be a market-moving day for one currency in particular – the US Dollar. A brace of risk events in North America are set to dominate proceedings, with Federal Reserve Chairman Ben Bernanke’s appearance before the US Congress’s Joint Economic Committee this afternoon set to be closely monitored by currency market participants. Ostensibly, Bernanke’s speech will focus on the condition of the real economy in the States. However, the head of the world’s leading central bank will have his comments picked over by a crowd of analysts looking for any slight nuance which suggests that the Fed is about to begin winding down its controversial Quantitative Easing programme.

Any hint that the unprecedented era of ‘easy money’ which the Fed heralded in the wake of the 2007/8 credit crisis is coming to a close will be likely to trigger a wave of support for the US Dollar. Such a scenario would surely send Cable back down through the 1.5000 level, with the next significant floor to the downside coming at 1.4230. However, the Greenback will not be the only currency to be effected by any such commentary from Bernanke. Relative values of the high-yielding risk-sensitive currencies including the Australian and New Zealand Dollars will also be markedly altered by such words. The Antipodean tenders enjoy a complex relationship with the Fed’s Quantitative Easing scheme. On the one hand, they tend to derive strength from it due to general global asset prices’ dependence on the availability of ready credit to fuel their ongoing price bubble - a fact which benefits AUD and NZD. From this perspective, any hint of a cutting of QE from the Fed later today might serve to send the GBP AUD and GBP NZD exchange rates higher.

However, an indication from Bernanke that his Bank is considering a return to normal monetary policy conditions would send out a signal to the world that the global economy has left its recent deep and painful credit crisis behind could well trigger an improvement in investor sentiment which would see the AUD and NZD supported. Today could be a game-changing day.

Pound to Euro Exchange Rate (GBP EUR) Tumbles On UK Inflation Figures

David Woodsmith — Tue, 21 May 2013 14:00:00 +0100

This morning’s main event in the global currency markets came in the form of the publication of the latest headline inflation data from the UK’s Office of National Statistics (ONS). The April Consumer Price Index figure showed at significantly below the expected annualised level of 2.6%. The year-on-year print of 2.4% was considerably lower than March’s 2.8% showing, suggesting that price pressures in the British economy are easing.

The ONS’s analysis of the data attributed the drop-off to lower transportation costs, and in particular to lower fuel prices which affect the price of air fares as well as the cost of petrol at the pump. The ONS went on to posit that the price rise figure would have been lower still were it not for a particularly wet winter which effected crop output, pushing UK food prices higher.

The publication of the inflation data saw analysts tripping over themselves to jump on the ‘Quantitative Easing’ charabanc once more. Recent Bank of England monetary policy committee meetings have seen three of the nine man committee, including the current Governor Mervyn King, vote to increase the GBP375bn already allocated to the controversial programme.

The minutes of the MPC’s April committee meeting, which are set to be released tomorrow morning, will provide further guidance for investors holding Sterling. We already know that less than five committee members voted for more QE. If the minutes reveal that the number in favour was four, then more QE for the UK would appear to be likelihood in the short to medium term. Such an outcome would be likely to cause the Pound to give up ground against all of the other sixteen most-actively traded currencies.

This morning’s British price rise figures have sent the Sterling to euro exchange rate (currency : GBP EUR) down as low as 1.1773. Tomorrow morning could elicit further downside for the pair, depending on the vote split and tone of the bank of England minutes.

GBP EUR, GBP AUD & GBP NZD Exchange Rates Under Threat

John Cameron — Tue, 21 May 2013 09:00:00 +0100

This morning’s session, from the perspective of the Pound Sterling, at least, is likely to be dominated by the release of a raft of price data which may alter investors’ perspective on the future direction of the Bank of England’s monetary policy. The key headline figure to look out for comes in the form of April’s annualised Consumer Price Index figure, purely and simply because it is the benchmark which the British government uses in order to gauge the UK’s macroeconomic situation. March’s year-on-year CPI figure showed at 2.8% and analysts’ expectations are that today’s release will show that the rate of British price rises has dropped off to 2.6%. The Bank of England stated earlier in the year that it expected CPI inflation to rise above 3.0% during the middle to latter part of 2013, so a decrease in the key inflation figure to 2.6% would provide the UK’s central bank with renewed leeway to further loosen its policy stance should it deem it necessary.

A showing of 2.6% would therefore be likely to stoke market rumours that an increase to Britain’s Quantitative Easing policy might be on the cards. The Bank’s nine-man Monetary Policy Committee has so far avoided the temptation to add to the £375bn worth of funds which have thus far been allocated to the scheme during 2013, at least in part because of concerns that British price rises might be starting to pick up momentum. With current Bank of Canada Governor Mark Carney taking over the top job at Threadneedle Street next month, a dip in UK inflation today would be likely to fuel market rumours that Carney will stamp his authority on the austere institution by immediately attempting to convince the Monetary Policy Committee that more QE is necessary to dislodge the UK economy from its current low/zero growth rut. Such an outcome would be likely to send the Pound to euro exchange rate (currency : GBP EUR) down towards the 1.1600 level once more.

Elsewhere, yesterday’s session was marked by a firming of global commodities prices which favoured the Australian and New Zealand Dollars. A repeat performance today would be likely to elicit further downside for the Pound to Australian Dollar (currency : GBP AUD) and Pound to New Zealand Dollar (currency : GBP NZD) exchange rates.

Foreign Currency Exchange Rate Predictions For GBP EUR USD NZD

Tim Boyer — Mon, 20 May 2013 14:00:00 +0100

This morning’s report from the Ernst & Young Item Club which found that the real cost to the UK economy of high levels of inflation since 2010 has been £10bn. The news has held back the POUND STERLING on the day. The latest Rightmove House Price survey, released overnight, has done little to improve investor sentiment towards Sterling. The Pound is expected to trade on a NEUTRAL TO NEGATIVE bias in the lead-up to tomorrow’s UK CPI Inflation data for April.

The EURO has performed reasonably in the global currency markets during today’s session in spite of this weekend’s massive anti-austerity protests in Italy. The best estimates were that some 100,000 protestors took to the streets to appeal to the nation’s leaders to ditch plans for spending cuts and tax hikes. The scenes could weigh heavily on the minds of investors holding euros during this week, thanks to a paucity of eurozone data releases. The outlook for the single currency is NEUTRAL. The current GBP EUR exchange rate stands at 1.1829.

The US DOLLAR has given up a little ground against Sterling today, causing the Pound to US Dollar exchange rate (currency : GBP USD) to accumulate to 1.5208. The main event this week for investors holding the Buck comes on Wednesday evening when the minutes of the most recent Federal Reserve Open Market Committee meeting are published. If they include any hint that policy members are looking at paring down the US Quantitative Easing programme, then expect the Greenback to make a comeback. The USD is expected to trade on a NEUTRAL TO POSITIVE footing in the short term.

The NEW ZEALAND DOLLAR has outperformed all of the other sixteen most-actively traded global currencies so far today. A generalised firming of worldwide commodities prices following their recent losing streak has assisted the Kiwi and rumours that Wednesday’s US Federal Reserve FOMC minutes will hint that America’s QE programme is here to stay for the timebeing have further assisted the NZD. The current GBP ZND exchange rate stands at 1.8645 and the outlook for the Kiwi is NEUTRAL to positive.

GBP TRY Exchange Rate Forecast To Fall, Outlook Is Positive For GBP AUD, GBP NZD

Toni Johnson — Mon, 20 May 2013 09:00:00 +0100

A press release from leading credit ratings agency Moody’s Investor Services, released during Friday’s session, spelled good news for Turkey and for the Turkish Lira. Moody’s announced that they had upgraded their credit rating of the Mediterranean nation’s sovereign debt to Baa3. The move means that Turkish bonds are now considered to be of ‘investment standard’, allowing them to be bought up by a large number of global funds. The Pound to Turkish Lira exchange rate (currency : GBP TRY) ended last week’s session at 2.7942, but expect the pair to register renewed losses as the Lira starts this week’s session firmly on the front foot.

Elsewhere, perhaps the biggest loser in the global markets last week was Gold. The precious metal’s value slumped by almost $100 from its opening level of $1,446 per troy oz, as investors continued to factor-in a significantly more stable global picture as the situation in the markets continues to return to some kind of normality following the worldwide credit crisis which reared its ugly head in 2007.

The move lower for gold last week was also partly triggered by the news of a short sale order placed on the New York exchange during the previous Friday’s trading session. Market whispers suggest that the sell order was for either 400 or 500 tonnes of gold – a massive quantity on a global scale. Investors speculated that the order was so large that it must have been placed by a major global central bank. Suspects included the US Federal Reserve, (who analysts posited may have wanted to dump gold on the market in order to cause the US Dollar to accumulate). Other rumours suggested that it was Italy’s central bank cashing-in on its gold reserves in an attempt to bring the nation’s massive government deficit under control, or alternatively an action by the Bank of Japan aimed at further weakening the Yen.

The weekly loss of almost 7% for gold is likely to elicit further losses for other global commodities. With the market price of raw materials now looking at having ‘topped out’ in 2011, it would appear likely that there will be further losses for gold, along with oil and base metals, in the near-term. Such a scenario would cause current market investors to shift out of the Australian and New Zealand Dollars along with the South African Rand and the Canadian Dollar. There may be gains to come for GBP AUD, GBP NZD, GBP ZAR and GBP CAD.

GBP USD Exchange Rate Lower, GBP EUR Rate Steady

John Cameron — Fri, 17 May 2013 14:00:00 +0100

A light schedule of data releases in the global economy have made for limited price action in the currency markets so far today. Perhaps the major driver amongst the investment community at the moment is the ongoing situation in Syria, where evidence has emerged within the past few days that the ruling Assad regimes has apparently used chemical weapons against civilians. Although the international community is yet to confirm this as fact, the empirical evidence appears overwhelming. If the Western world does come to the conclusion that Syria’s government has used chemical weapons, then it would appear highly likely that there will be some form of American-led military intervention in the troubled Arab state. President Obama stated during the middle part of last year that any proof that Assad had made use of chemical weapons would represent the crossing of a ‘red line’.

The prospect of yet another prolonged military campaign for the US and her allies has caused global appetite for risk to dip on the day, triggering renewed support for the safe-haven US Dollar which has sent the Pound to US Dollar exchange rate (currency : GBP USD) back down into the lower half of the 1.5200s once more. The development has had the reverse effect on the high-yielding currencies, triggering selling pressure on the commodity-driven Australian and New Zealand Dollars which has sent the GBP AUD and GBP NZD exchange rates up through the 1.5600 and 1.8800 levels respectively.

Elsewhere, yesterday’s session brought the release of the latest inflation data from two of the world’s leading economies. Both the whole-of-eurozone and US price hike figures showed that the rate of domestic price rises is slowing. The data leaves the door open for the Federal Reserve to continue with its $85bn per month Quantitative Easing programme, and for the European Central Bank to consider further loosening its monetary policy following its decision to cut its key lending rate to a record low of 0.50% two weeks ago. The news could serve to cause the GBP EUR and GBP USD exchange rates to float upwards during coming sessions.

GBP CAD Exchange Rate Forecast To Rise, Outlook For GBP USD Rate Positive

Ben Hughes — Fri, 17 May 2013 09:00:00 +0100

The fortunes of the US Dollar and conditions in America’s vast labour market have been intertwined since the Federal Reserve stated last month that it would not be calling a halt to its controversial Quantitative Easing programme until the jobs situation in the States had improved considerably. This set up means that any employment data in the US is almost guaranteed to be market-moving. Yesterday afternoon’s European session provided a prime illustration of this when the latest edition of the weekly US Initial Jobless Claims data showed at a lower than anticipated level. The publication triggered significant price action for the Pound to US Dollar exchange rate (currency : GBP USD), sending the pair up from the 1.5100s into the 1.5300s.

The key data release today also comes from North America, in the form of April’s Canadian Consumer Price Index numbers. Expectations are that the Canadian figures will show a cooling in the rate of domestic price rises. Such an outcome may calm rumours surrounding a near-term normalisation of interest rates from their current ultra-low levels. This could harm the Pound to Canadian Dollar exchange rate (currency : GBP CAD), sending Sterling back up towards the 1.6000 level against its Canadian counterpart.

This afternoon’s US Michigan Confidence Survey is also likely to prompt traders to adjust their positions ahead of the weekend closedown. A poor showing from the latest edition of the closely-watched gauge of investor sentiment may cause market participants to shift out of the risk-laden Australian and New Zealand Dollars, sending the GBP AUD and GBP NZD rates sharply higher before tonight’s market close. The Kiwi Dollar has been under some selling pressure over the past week thanks to comments from the Antipodean nation’s policymakers confirming that the Reserve Bank of New Zealand has been actively stepping into the global currency markets to weaken the NZD.

Foreign Currency Forecasts For GBP EUR Exchange Rate & Outlook For AUD, NZD & USD

Tim Boyer — Thu, 16 May 2013 15:00:00 +0100

A significantly weaker than anticipated set of US Initial Jobless Claims data, released a short time ago in the States, has triggered a renewed bout of selling pressure on the US DOLLAR, sending the Pound to US Dollar exchange rate (currency : GBP USD) up from its intraday low of 1.5193 back up to close to the 1.5300 level as New York braces itself for the opening bell.

The US labour market figure came as a double blow to the Greenback, revealing that the number of new unemployment benefit claimants hit a higher than anticipated 360,000 last week versus analysts’ expectations of a showing of 330,000. The data also brought a negative revision to the preceding week’s counterpart figure, bringing further bad news for the Buck. The outlook for the US DOLLAR is now downwardly revised to NEUTRAL.

Elsewhere, this morning’s whole of eurozone Consumer Price Index data came in slightly below expectations, confirming that the headline CPI measure of price rises in April had dipped from March’s 1.5% showing down to 1.1%. The figure gives the European Central Bank further leeway to ease monetary policy as 2013 progresses. For this reason, the forecast for the EURO moving forward is NEUTRAL TO NEGATIVE.

Meanwhile, the high-yielding AUSTRALIAN and NEW ZEALAND DOLLARS have given up significant ground against most of the other sixteen most-actively traded global currencies so far today. The GBP NZD exchange rate (currency : GBP NZD) has broken the 1.8700 level in spite of New Zealand Prime Minister John Key’s overnight assertion that the Reserve Bank of New Zealand did not have the capability to turn around the direction of the prevalent trend for the Kiwi. Investors did not believe him and moved out of NZD-denominated assets. Analysts’ prediction for the NEW ZEALAND and AUSTRALIAN DOLLARS moving forward is for more NEUTRAL TO NEGATIVE trading.

GBP EUR Rate Dips, GBP USD Rate Forecast To Follow Suit

James Fuller — Thu, 16 May 2013 09:00:00 +0100

Yesterday afternoon’s session in the currency markets provided one of the most surprising headlines of the year – leading credit ratings agency Fitch announced that it had UPgraded the credit rating of long-term debt struggler Greece from CCC to B-. The development was not just good news for the Hellenic state, but also for the eurozone as a whole. The Pound euro exchange rate (currency : GBP EUR) dipped as a consequence, making a brief visit down into the 1.1700s during the latter part of yesterday’s afternoon session.

Elsewhere, yesterday brought more bad news from Britain’s retail banking sector, with UK based banking giant HSBC revealing that it is set to shed a further 14,000 jobs from its vast global operation. The rationalisation of recent times in this key sector of Britain’s economy held back the Pound on the day, making sure any gains for the UK tender against the other majors were limited.

Meanwhile, yesterday afternoon’s Crude Oil Inventories figure in the States, which showed a far larger than anticipated weekly drop in reserves of black gold, can be taken one of two ways. Looking at this from a ‘glass half empty’ perspective, it shows the current low level of American oil extraction, meaning that economic participants in the world’s leading economy remain highly dependent on the global oil market for their continued prosperity.

Looking at the figure in a more positive light, the fact that the US is having to deplete its reserves would appear to be a sign that activity in the world’s premier economy is firmly on the up. The Pound to US Dollar exchange rate (currency : GBP USD) has made pronounced losses throughout this week’s session; the pair briefly dropped into the 1.5100s late yesterday as investors adjusted their positions to factor-in a higher chance of a winding down of Quantitative Easing in the short term. It seems unlikely that GBP USD’s recent losses are at an end yet.

GBP EUR Outlook Unclear As BoE Increases UK GDP Forecast

Tim Boyer — Wed, 15 May 2013 14:00:00 +0100

It was a good news / bad news morning in the currency markets for the Pound Sterling. On the credit side, the Bank of England’s Inflation Report saw the UK’s central bank upwardly amend its growth prediction for Britain’s economy, with overall activity expected to expand by 0.5% during the three months to the end of June 2013.

The positive forecast, which if it comes to pass, will mean that the British economy has pulled further away from recession helped the Pound. However, this encouraging headline prediction was tempered by Governor Mervyn King’s assertion that the improvement in the UK economy would be ‘modest and sustained’. Investors holding Sterling-denominated assets were hoping for a more upbeat assessment from the Bank’s Governor. As ever, market participants voted with their feet and the GBP EUR rate only managed to improve to 1.1845 on the day.

Gains for the Pound to euro exchange rate (currency : GBP EUR) would surely have been of a greater magnitude were it not for Office of National Statistics numbers which confirmed that the overall rate of UK unemployment increased by 15,000 to 2.52m during the first quarter of 2013. The level of joblessness in the British economy has steadfastly refused to fall since the global financial crisis began to unfurl during the early part of 2008. The high level of residual unemployment in the British economy points to inherent weaknesses in the UK economy after three decades of under-investment in the domestic manufacturing and industrial sectors. Such a structural fault is likely to hold back Sterling in the medium to long term.

Elsewhere, this morning’s latest whole of eurozone GDP growth figures showed that activity in the region contracted by a slightly larger than anticipated 1.0% during the first three months of 2013. Increasingly, the GBP EUR market is looking like a slugfest between the currencies of two inherently weak economies. As of this point, there is no clear winner.

Losses Forecast For GBP EUR Exchange Rate, GBP USD Heads Southwards

David Woodsmith — Wed, 15 May 2013 09:00:00 +0100

The US Dollar once again market outperformed during yesterday’s session in the global currency markets. By the middle part of yesterday’s North American session, the Pound to US Dollar exchange rate had lost around half a percent of its value and had dipped to 1.5227. This represented the pair’s lowest level for some three weeks.

The Greenback had started the day in good form thanks to Monday’s stronger than expected US Advance Retail Sales data and market rumours that the Federal Reserve is set to begin downsizing its Quantitative Easing programme. However, support for the Buck really started picking up steam when the International Energy Agency (IEA) issued a report predicting that within five years the USA will change from the world’s leading net importer of oil into an oil exporting nation. The dramatic turnaround will be attributable to a sharp increase in the volume of shale oil being extracted via the controversial method of ‘fracking’.

The dramatic news, in combination with the US’s recent withdrawal from Afghanistan and Iraq is likely to see America begin to reduce its massive budget deficit. An additional knock-on effect of the development is likely to be a move in favour of the US Dollar in the global currency market. A near-term target for Cable in such a scenario comes at 1.4831 and the ultimate downside goal for GBP USD is provided by January 2009’s multi-year low of 1.3498.

Looking ahead to today’s session, three key risk events in the data schedule have the capability to alter levels on the Pound to euro exchange rate (currency : GBP EUR). The latest UK Jobless Claims figure leads the way. The April data is expected to show a reduction of 3,000 in the number of British unemployment claimants compared to the month before. Then, at 1000hrs BST, comes the publication of the advance version of the official Eurostat whole of eurozone GDP data for Q1. The key release is expected to reveal that mainland Europe’s economy contracted by 0.9% in the first three months of this year. With expectations as low as this, the potential exists that the key number will come out better than expected. The final risk event of note this morning comes in the form of the latest Bank of England Quarterly Inflation Report. Any sniff of more Quantitative Easing for the UK economy could trigger heavy selling pressure for the Pound.

Outlook For Pound To Euro Exchange Rate (GBP EUR) Improves Following Weak German ZEW Index

Toni Johnson — Tue, 14 May 2013 15:00:00 +0100

The main event in the currency markets this morning was provided by the publication of the latest edition of the closely-monitored ZEW Sentiment Survey in Germany. Analysts had been anticipating that the gauge of confidence amongst economic participants in the eurozone’s premier economic power would show a healthy increase from last month’s print of 36.3.

When the survey was released, it showed a tiny increase of only 0.1 in the survey’s headline figure; the development came as a major blow to investors holding euro-denominated assets and initially sent the Pound to Euro exchange rate (currency : GBP EUR) to within a whisker of the 1.1800 level during the latter part of this morning’s European equities session. However, the pair subsequently peeled back and is currently trading at 1.1779. It would appear, given the disappointing nature of the German data, that there could be further upside to come for GBP EUR in the near-term.

Elsewhere, the Australian Dollar has come under renewed selling pressure against nearly all of the sixteen most-actively traded global currencies during today’s session after the nation’s Treasurer Wayne Swan delivered his sixth, (and possibly his final), budget statement. Swan had to eat a large slice of humble pie when he addressed the Australian parliament earlier, having asserted that he would be able to balance the nation’s books last year. He radically altered this prediction, telling Australia’s lawmakers that this year’s gap between government outgoings and revenues stood at a whopping AUD19.4bn in 2012. Swan went on to forecast that the national deficit for the coming year would be almost as large at AUD18.0bn.

The markets did not like the sound of what Swan had to say and moved against the Aussie. The shift saw the Australian Dollar to US Dollar exchange rate (currency : AUD USD) settle below the psychologically-key parity level to touch an intraday low of 0.9896. Meanwhile, the Pound to Australian Dollar exchange rate (currency : GBP AUD) has broken back above the 1.5400 level today.

Pound To US Dollar Exchange Rate (GBP USD) Falls, GBP EUR Rate Forecast To Accumulate

John Cameron — Tue, 14 May 2013 09:00:00 +0100

The US Dollar continued its near-term renaissance during yesterday’s session in the currency markets, gaining ground against virtually all of the sixteen most actively traded currencies. The Greenback started the day on the front foot thanks to reports in the States that the US Federal Reserve had formulated a road map which would see it wind down its highly controversial Quantitative Easing programme which has artificially subdued the Buck for several years.

The forward move for the US Dollar was further fuelled by yesterday afternoon’s US Advance Retail Sales data which showed that shop sales in the world’s premier economy had unexpectedly increased last month. Analysts had been expecting a reduction of 0.3% in the figure, so in a clear case of ‘buy on the rumour, sell on the news’, the US Dollar hovered up support post-release, as investors increased their bets that the QE era is drawing to a close in the States. The news saw the Pound to US Dollar exchange rate (currency : GBP USD) smash down through the 1.5300 level as the European equities session drew to a close.

Looking ahead to today’s session, the major data release of the day comes later this morning in the form of this month’s ZEW Sentiment Survey in Germany. As long as the German economy continues to perform, investors are able to remain sanguine about the future prospects for the single currency. However, a weak showing for the key gauge of German confidence would surely send the Pound to Euro exchange rate (currency : GBP EUR) back up through its key resistance level at 1.1900. Consecutive closes above this rate would send out a strongly bullish signal for the pair moving forward. German GDP figures, due out on Wednesday morning, will provide the pair with further direction – a showing of below the annualised 0.2% annualised figure would trigger further upside for GBP EUR.

Foreign Currency Exchange Rate Predictions For GBP EUR AUD USD

Minesh Chaudhari — Mon, 13 May 2013 14:00:00 +0100

With very little in the way of significant UK data releases until Wednesday morning’s jobs data, the POUND STERLING has traded on an even keel today. Last week’s suggestion that a revised set of construction industry data from the middle part of last year may mean that the British economy actually avoided entering a double dip recession could provide a near-term fillip for Sterling. The CBI’s assertion that levels of confidence amongst British companies is on the up means that the Pound is expected to trade with a NEUTRAL TO POSITIVE bias in the short term.

The EURO has traded steadily against Sterling so far today. The European Central Bank’s action of ten days ago, when it surprised investors by cutting its key lending rate by 25 basis points, looks to be fully factored-in to pricing on the single currency now. The GBP EUR exchange rate stands at 1.1847 and the fact that the pair has not managed to hold above the psychologically significant 1.1900 level suggest that investors fell that any further loosening of monetary policy by the ECB is unlikely. The euro is expected to trade with a NEUTRAL bias in the near-term.

The AUSTRALIAN DOLLAR has lost a little ground against the Greenback and the Pound in early trading today, sending the GBP AUD exchange rate up to its current level of 1.5409. Last night’s slightly weaker than expected Industrial Production and Retail Sales numbers have taken the edge off risk appetite and rumours abound that Treasurer Wayne Swan’s budget, which he delivers tomorrow, will allude to the need for a weaker Aussie in order to balance the national budget. The outlook for AUD is NEUTRAL TO NEGATIVE.

The US DOLLAR has given up a little ground against Sterling so far today, sending the GBP USD exchange rate up to 1.5379. Weekend reports that the Federal Reserve’s Open Market Committee has put in place a plan for curtailing its Quantitative Easing programme – a move which would strongly favour the Buck. Tomorrow’s domestic Industrial and Manufacturing Production data will be the next risk event of note for the Dollar, which is expected to trade on a NEUTRAL footing in the lead-up to this release.

GBP EUR Exchange Rate Forecast To Rise, Same Story For GBP AUD

Frank Davies — Mon, 13 May 2013 09:00:00 +0100

Decisions by two of the world’s leading central banks appear likely to continue to have a pronounced effect on price action in the global currency markets this week. Last week’s surprise announcement by the Reserve Bank of Australia that it was cutting its key lending rate by 25 basis points to a new record low of 2.75% came as a body blow to the Australian Dollar, sending the Pound to Australian Dollar exchange rate (currency : GBP AUD) up to its highest level since the first week of this year.

Selling pressure on the Aussie was accentuated by market whispers that leading investor George Soros, (famous for his strong bet against Sterling in 1992) had taken out short positions against the Australian tender totalling US$1bn.

Yesterday’s statement from Australia’s Treasurer Wayne Swan that the historically strong Aussie, which has reached record highs against the Pound earlier this year, has provided ‘an unprecedented whack’ to the nation’s tax revenues, meaning that the Anitipodean state has not managed to balance its budget this year, as expected. The news is likely to increase the likelihood that Australian policymakers will take steps to weaken their currency as 2013 progresses.

Elsewhere, the European Central Bank also caught investors on the back foot when it announced that it was cutting interest rates in the eurozone to a new all-time low of 0.50% ten days ago. The move eroded the slight yield advantage which the single currency had enjoyed over Sterling, sending the Pound to euro exchange rate (currency : GBP EUR) briefly back above the 1.1900 level last week. Tomorrow morning’s publication of the latest edition of the closely-monitored ZEW Index in Germany will afford the euro further near-term direction, as will Wednesday morning’s key German GDP growth data for Q1. A showing of 0.2% is expected – anything less than this would heap the pressure on the single currency, making a break back above the psychologically vital 1.2000 level a realistic possibility for GBP EUR in the near term.

Pound To Euro Exchange Rate (GBP/EUR) Steady Despite Co-OP Credit Downgrade

David Woodsmith — Fri, 10 May 2013 14:00:00 +0100

Poor UK data releases marred this morning’s session for the Pound Sterling. A weaker than anticipated print for the latest British Construction Output data ensured that the Pound started the session under pressure. The key gauge of activity in Britain’s building sector showed a year-on-year drop off in activity of a greater than anticipated 7.4%, suggesting that demand for housing remains subdued in the UK.

March’s UK Trade Balance data, released at the same time, also disappointed. The figure showed that the UK’s trade gap the month before last stood at £3.13bn – somewhat worse than analysts had been anticipating. It appears that the UK economy’s ongoing lacklustre performance in the Manufacturing / Industrial sectors is continuing to harm its import / export situation.

Meanwhile, there was bad news for Britain’s retail banking sector earlier today when leading credit ratings agency Moody’s announced that it was downgrading the UK-based Co-Op Bank’s debt rating to junk status. The action raised the spectre of the funding difficulties which caused a run on another British financial institution, Northern Rock, shortly after the advent of the credit crisis in 2008. The Pound has managed to hold its own in the markets today in spite of the raft of negative news from the UK – the Pound to euro exchange rate (currency : GBP/EUR) has held above the 1.1800 level for the whole of today’s session.

Elsewhere, perhaps the most significant piece of price action on the day in the global currency markets has seen the US Dollar to Japanese Yen exchange rate (currency : USD/JPY) break through the psychologically-key 100.00 level for the first time since the first half of 2009. The move has a lot more to do with market movement for the Yen rather than for the Greenback and bears testimony to the concerted effort by the Bank of Japan to weaken the Yen over the past six months. Japan’s policymakers believe that a weaker domestic currency is a vital requirement for increasing activity levels in the industrial sector of Asia’s second largest economy. It is unlikely that the recent bout of Yen weakness has run its course yet.

Pound US Dollar Exchange Rate (GBP USD) Slips On Positive US Jobs Data

Toni Johnson — Fri, 10 May 2013 09:00:00 +0100

The US Dollar was star performer in the currency markets yesterday afternoon following the release of a strong set of domestic labour market data. Official US government figures revealed that the number of Initial Jobless Claims had fallen to its lowest level since late in late 2007 last week. The print of 323,000 new claimants bettered analysts’ expectations of a 335,000 showing, suggesting that conditions in America’s real economy are improving. Last Wednesday’s comments from the Federal Reserve’s FOMC ensured that yesterday’s US jobs data strongly benefited the Greenback.

The Fed’s promise that there would be no scaling back of its Quantitative Easing programme until conditions in the American labour market improved initially caused the Buck to weaken. However a combination of a relatively strong April Non-Farm Payrolls figure last Friday and yesterday’s highly positive weekly Initial Jobless Claims data have prompted investors to trim their bets on a continuation of QE from the Fed, causing the US Dollar to be well-bid. By the latter part of yesterday’s North American equities session, the Pound to US Dollar exchange rate (currency : GBP USD) had lost the best part of a percentage point on the day and had traded down to as low as 1.5430.

Looking ahead to today’s session, the major risk event of note comes in the form of the latest Canadian unemployment data. Analysts are expecting the April data to show that the overall level of unemployment in Canada has remained static at 7.2%. If the print shows at anything below this, then the Pound to Canadian Dollar exchange rate (currency : GBP CAD) is likely to slip back below the 1.5500 level which it is currently teetering just above. The GBP AUD, GBP NZD and GBP ZAR exchange rates are also likely to suffer losses in such a scenario thanks to the uptick in global risk appetite which it would engender.

Foreign Currency Exchange Rate Forecast For GBP EUR And Predictions For USD & AUD

John Cameron — Thu, 09 May 2013 14:00:00 +0100

The Bank of England’s monetary policy committee opted against any further loosening of the UK’s monetary policy earlier today and the POUND STERLING registered respectable gains against the majority of the other sixteen most actively traded global currencies as a consequence. With this morning’s British Industrial and Manufacturing production data beating expectations, it has been a decent day all round for the Pound. The outlook for Sterling is NEUTRAL TO POSITIVE.

The EURO has been one of the worst performing of the major currencies so far today following this morning’s publication of its monthly report by the European Central Bank. The release saw the ECB cut its whole of eurozone growth forecast for this year to -0.4%, holding back the single currency on the day. Selling pressure on the euro has sent the Pound to euro exchange rate (GBP/EUR) up to as high as 1.1855 and the single currency is expected to trade on a NEUTRAL TO NEGATIVE footing moving forward.

The US DOLLAR has lost further ground against Sterling so far today, sending the GBP USD exchange rate up to 1.5587. The Greenback continues to leak support in the currency markets as investors factor-in the Federal Reserve’s comments of last week which suggested that its controversial $85bn per month Quantitative Easing programme is here to stay, at least until conditions in America’s labour market ameliorate. The Buck is expected to trade on a NEUTRAL TO NEGATIVE footing in the meantime.

The AUSTRALIAN DOLLAR has market outperformed so far today, causing the GBP AUD exchange rate to dip to as low as 1.5144 earlier. Yesterday’s session was a poor one for the Aussie as investors fretted that the Reserve Bank of Australia might follow its New Zealand counterpart’s lead in actively intervening in the currency markets to weaken its currency. Last night’s positive domestic unemployment data helped the AUD to gain ground on the day, but while Australia’s policymakers call for a weaker tender, the outlook for the Aussie is no more than NEUTRAL.

GBP/EUR Exchange Rate Gains, GBP/AUD & GBP/NZD Decline

Ben Hughes — Thu, 09 May 2013 11:00:00 +0100

Last night’s Asian session was marked by a pronounced downside move for both the Pound to Australian Dollar exchange rate (currency : GBP AUD) and the Pound to new Zealand Dollar exchange rate (currency : GBP NZD). Both Antipodean tenders enjoyed strong support overnight thanks to better than anticipated domestic employment data.

New Zealand lead the way with labour market data for Q1 2013, which surprised analysts by revealing that the domestic rate of joblessness had unexpectedly decreased to 6.2% during the three months to the end of March. Economists had been anticipating that the level of unemployment would remain level at 6.8%. The Kiwi had been under heavy selling pressure in the lead up to last night’s release thanks to the Reserve Bank of New Zealand’s announcement that it had intervened in the global currency markets in order to weaken the Kiwi Dollar in an attempt to boost the nation’s exporters.

Hot on the heels of last night’s New Zealand unemployment figures came the latest Australian jobs numbers. The figures for April also showed a surprise drop from 5.6% in March to 5.5% last month. The news helped the Australian Dollar improve against the Pound, sending the GBP AUD exchange rate down into the middle 1.5100s during last night’s trading session.

Meanwhile, in Europe, the Pound to Euro exchange rate (currency : GBP EUR) has registered gains in early trading today thanks to the publication of the latest European Central bank monthly report. Significantly, the ECB trimmed its 2013 growth forecast from 0.0% down to -0.4% in the report. The single currency has suffered as a consequence and GBP EUR may now trend upwards towards the band of resistance just above the 1.1900 level which it has tested and bounced down off on two separate occasions since January.

New Zealand Dollar Forecast To Weaken As RBNZ Announces Currency Market Intervention

Tim Boyer — Wed, 08 May 2013 14:00:00 +0100

The New Zealand Dollar has been the major mover on the day in the global currency markets, losing 0.86% of its value against the Pound. The shift out of Kiwi-denominated assets has been triggered by the dramatic news that the Reserve Bank of New Zealand has intervened in the foreign currency markets in order to actively weaken the New Zealand Dollar. The revelation that the RBNZ had followed the recent lead set by the Swiss National Bank and the Bank of Japan caused investors to swiftly adjust their positions in order to water down their exposure to the Kiwi Dollar.

The development sent the Pound to New Zealand Dollar exchange rate (currency : GBP/NZD) briefly back above the 1.8500 level earlier today, and the outlook for the New Zealand tender is now considerably less positive than it was in the second week of last month when the pair tumbled down to a new record low at 1.7707.

The forward lurch for GBP NZD would surely have been of a greater magnitude were it not for last night’s Chinese Trade Balance data which showed that imports into the world’s second most-active economy increased by an annualised 16.8% last month. The figure significantly bettered analysts’ expectations of a showing of 13.0%. Ordinarily, such a number would strongly favour the Kiwi because China remains New Zealand’s number one export market. However, today was a far from ordinary day for the NZD.

The positive news from China has elicited support for the Australian Dollar, which has managed to recoup a fair portion of the losses which it incurred against Sterling following Tuesday morning’s shock interest rate cut by the Reserve Bank of Australia. The Chinese print has helped to send the Pound to Australian Dollar exchange rate (currency : GBP AUD) down to as low as 1.5172 earlier. The Aussie is afforded further scope for improvement tonight when April’s domestic unemployment data is released. A drop in the total level of domestic joblessness from March’s 5.6% showing would send GBP AUD back down towards 1.5000.