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Posted July 22nd, 2013 by Charles Purdy

Will Sterling’s good run continue? | Smart Daily Currency Note

GBP/EUR – 1.1610
GBP/USD – 1.5278
EUR/GBP – 0.8612
EUR/USD – 1.3160
GBP/AED – 5.6114
GBP/AUD – 1.6588
GBP/CAD – 1.5822
GBP/CHF – 1.4360
GBP/CNY – 9.4484
GBP/HKD – 11.8552
GBP/HUF – 341.74
GBP/INR – 90.48
GBP/JPY – 152.75
GBP/NZD – 1.9281
GBP/RUB – 49.3507
GBP/SEK – 9.9634
GBP/THB – 47.28
GBP/ZAR – 14.9641

Sterling

Sterling ended last week on a largely positive note having risen for four days straight against the US dollar and made notable gains against the euro. Sterling benefited from the Monetary Policy Committee minutes released on Wednesday which showed all nine members voting against increasing quantitative easing. Sterling also received some support from Friday’s Public Sector Net Borrowing data that revealed a slight reduction in the deficit during the month of June. Furthermore, a number of key figures predict that key UK GDP data due this Thursday will show an increase in growth during the second quarter giving performance an extra boost. Looking ahead to this week, the aforementioned GDP figures are likely to have a substantial impact upon sterling strength should they differ from last week’s predictions. Outside of this, there is not a huge amount of data being released this week with the potential to impact performance. Mortgage approval data – a leading indicator of demand for housing – has the potential to have some influence when it is released on Tuesday, but the GDP data on Thursday along with on-going speculation on future monetary policy are likely to fuel market movement. Call in now to track sterling’s performance this week.

Euro

The Euro stayed fairly range bound on Friday with no data of high impact being released. Although German Chancellor Merkel gave positive vibes whilst discussing the economy in Germany and the euro-zone, it had a muted effect on the markets. Perhaps with her looking for re-election in September, it was expected that she would remain optimistic. We have a quiet day again for the euro today, but with French and Germany manufacturing PMI data on Wednesday and Germanys Business Climate survey on Thursday, any unexpected data is likely to cause volatility for the currency. There are also increasing concerns for southern state debts and additional funding requirements. Portugal, Cyprus and Greece seem to be at the top of this list and could significantly increase instability for the Eurozone. So call your trade for the latest rates and updates.

US Dollar

After a highly volatile week, the US dollar weakened on Friday on the back of on-going concerns about the tapering back of US asset-purchasing. Now that Fed Chairman Bernanke has stated that US monetary policy will be highly accommodative, the US dollar seems to be highly sensitive to new economic data and speculation amongst investors. Despite the fact that ratings agency Moody’s upgrading the AAA credit rating of the world’s largest economy from negative to stable, the currency lost ground against most of its major peers. Given the current sensitivity to new data, this week we can expect the release of Existing Home Sales data on Monday to spark movement as these figures serve as a leading indicator of economic health. Likewise, New Home Sales data on Wednesday is likely to have some impact on the dollar’s performance. Finally, on Thursday traders will look to Unemployment claims data to reveal how the US is faring in its quest to meet unemployment targets. Expect plenty of volatility amidst a raft of data and on-going uncertainty about future monetary policy. Call in now to keep pace with market movements.

Worldwide

Elsewhere the Canadian dollar weakened on Friday following a government report showing inflation lower than the Bank of Canada’s target of 2%. The New Zealand dollar gained momentum with the People’s Bank of China (New Zealand’s largest trading partner) announced it is going to remove limits on lending rates. The Yen weakened against the US dollar leading up to upper-house elections in Japan, which will be closely watched. The South African rand also gained strength against the US dollar amidst doubts that the US may reduce stimulus as early as expected. Today we have core retail sales from Canada and New Zealand trade balance figures. Tomorrow we will have Chinese Flash Manufacturing Purchasing Managers index along with New Zealand interest rate statement. Call now the latest news and updates.

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