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Posted July 18th, 2013 by Charles Purdy

Sterling benefits from BoE surprise | Smart Daily Currency Note

GBP/EUR – 1.1574
GBP/USD – 1.5161
EUR/GBP – 0.8637
EUR/USD – 1.3099
GBP/AED – 5.5699
GBP/AUD – 1.6567
GBP/CAD – 1.5818
GBP/CHF – 1.4317
GBP/CNY – 9.3087
GBP/HKD – 11.7616
GBP/HUF – 339.78
GBP/INR – 90.419
GBP/JPY – 152.1
GBP/NZD – 1.9282
GBP/RUB – 49.0979
GBP/SEK – 9.993
GBP/THB – 47.106
GBP/ZAR – 14.943

Sterling

Sterling appreciated sharply yesterday morning in response to a double dose of positive data. The Monetary Policy Committee meeting minutes revealed a surprise 9-0 vote in favour of maintaining the Bank of England’s quantitative easing target instead of increasing it. This caused sterling to jump over a cent against the US dollar and euro as many key figures expected the vote to show several members (including the new Governor Mark Carney) to vote in favour of increasing the quantitative easing program, rather than the unanimous decision against this that was revealed. Performance was further boosted by data showing that unemployment claims dropped by over 20,000 in June, a much greater reduction than predicted. Sterling continued to perform well yesterday afternoon, trading at 1.16 against the euro and hovering above 1.52 against the US dollar. This morning sees the release of monthly UK retail sales data, which has the potential to either check or reinforce today’s optimism should figures differ significantly from predictions. Call in now to stay on top of continuing market reaction.

Euro

It seems that the euro is not master of its own destiny this week as it continues to play a largely reactionary role whilst events in the UK and USA continue to dominate. The euro weakened against sterling considerably yesterday morning and continued to decline throughout the day. The euro experienced more mixed fortunes in its performance against the dollar with reasonable movement seen in both directions, but little net movement, by the close of trading in London. Eurozone current account data, which details the difference in value between imported and exported goods may play some role in the euro’s performance today, as might Spanish 10-year bond data, but it is likely that events elsewhere may continue to dominate the headlines and drive market movement. Call in now to keep pace with developments and to get a live rate.

US Dollar

If investors were hoping for a clearer expression of intent from Fed Chairman Ben Bernanke, then they were certainly disappointed by his somewhat illusive report to Congress. Rather than laying out plans for future reductions in asset-buying, Bernanke remained accommodative and stated that the programme may be increased or tapered depending on economic conditions. Going forward this means that the US dollar is likely to be sensitive to changes in economic data in particular inflation data, as Bernanke stated that a slowing in asset-purchasing would be likely to happen if US inflation made a determined move towards the 2% target. Looking at the rates, the US dollar depreciated considerably against sterling in response to sterling strength, whilst a more mixed performance was registered against the euro. Bernanke will continue to testify to Congress today as US unemployment claims data is released as well as Philadelphia manufacturing data. Expect further volatility as markets react. Call in now to stay on top of developments and to receive a live rate.

Worldwide

Elsewhere, the Canadian dollar struggled yesterday after the Bank of Canada (with its new Governor at the helm) suggested that the economy remained sluggish and all but ruled out a potential interest hike in the near future. The Japanese yen struggled somewhat yesterday as confidence in the global markets grew. The Turkish lira was in the limelight once more as investors continue to speculate as to what action the central bank will take in the rate setting meeting next week. Overnight we saw the release of business confidence figures from Australia  and later on today wholesales sales figures may influence the relative strength of the Canadian dollar. Call Smart today for the latest news, and live quotes, for your currency.

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