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Posted July 25th, 2013 by Charles Purdy

Will today’s Growth figures affect sterling? | Smart Daily Currency Note

GBP/EUR – 1.1614
GBP/USD – 1.5348
EUR/GBP – 0.8605
EUR/USD – 1.3212
GBP/AED – 5.6384
GBP/AUD – 1.6778
GBP/CAD – 1.5821
GBP/CHF – 1.4372
GBP/CNY – 9.4186
GBP/HKD – 11.9065
GBP/HUF – 343.62
GBP/INR – 90.544
GBP/JPY – 153.48
GBP/NZD – 1.9189
GBP/RUB – 49.98
GBP/SEK – 9.9607
GBP/THB – 47.689
GBP/ZAR – 14.967

Sterling

Sterling showed signs of weakness yesterday morning but largely recovered during the afternoon, until it fell sharply against the US dollar in the evening. The weakness experienced earlier in the day was seen in response to speculation by Goldman Sachs that there is a 50% chance that the Monetary Policy Committee will loosen monetary policy when they meet again in August. Sterling received a boost from the minutes of the last MPC meeting when it was revealed that the members voted unanimously in favour of maintaining the quantitative easing programme rather than increasing it. If there was a vote in favour of further asset-buying at the next meeting then this would have the opposite effect. However, after maintaining a reasonably strong upward trajectory for the past week sterling was still close to monthly highs against the dollar by the close of trading in London. Today sees the most important sterling data release of the week in the form of second quarter Growth figures. These are largely predicted to show consecutive growth, but expect volatility should we see any significant divergence between average predictions of 0.6% growth and the actual figure. Call in now to see how the Growth figures affect sterling performance.

Euro

There were signs of life coming from the 17-member state yesterday as strong manufacturing data out of Germany and France bolstered demand for the region’s assets. It triggering the euro to climb against the majority of its most-traded peers, and to 1-months highs against the US dollar before tumbling as Barack Obama began to speak. The euro gains were not as considerable as they might otherwise have been if it were not for the conservative monetary policy implemented by the European Central Bank. Nevertheless, the data out of Europe so far this week is encouraging, and could signal the start of a slight recovery in the latter parts of this year. The significant piece of data our of Europe today is the results from the German business climate survey, a good indication of wider European economic conditions. Get in touch for the latest euro news.

US Dollar

The US dollar had a mixed day yesterday trading at variable rates against sterling and euro throughout the day, but strengthened aggressively in the evening as Barack Obama began to speak about the US economy. The day’s economic data releases were marginally more positive than expected, with increases seen in new home sales and better than expected growth in the manufacturing sector. This prompted moderate dollar strength during the afternoon. The US dollar strengthened yesterday evening following comments from the US President on the state of the US economy where we suggested the US had “made it through the worst of yesterday’s winds“. Unemployment claims data is being released this afternoon and is likely to impact on the US dollar’s performance today as investors will be interested to see how the world’s largest economy is faring in its pursuit of an unemployment rate of 6.5%. Additionally, today’s monthly Core Durable Goods Orders data is a leading indicator of US production levels and has a similar potential to have a substantial impact on the performance of the dollar. Call in now to see if this fresh economic data can reverse US dollar fortunes.

Worldwide

Elsewhere, the major movements were shown by the New Zealand and Australian dollars yesterday, as the commodity-backed currencies stumbled for the first time in four days following the release of weaker than expected Chinese manufacturing data which showed further declines through July, hitting the lowest level for 11 months. Strong local trade balance figures out of Japan yesterday morning were not enough to prevent the yen falling against its major trading partners. Investors took confidence from tentative signs of recovery out of Europe, causing demand to fall for the low risk, low yield Japanese currency. The Canadian dollar held firm on yesterday’s strong performance. Last night the Reserve Bank of New Zealand met to make its decision on interest rates, and later today we have consumer inflation data coming out of Japan. Get in touch for the latest rates.

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