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Posted August 11th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 11/08/10

EUR/GBP – 1.210

Sterling fell sharply yesterday against a stronger US dollar, hitting a 1 week low of $1.5750/£1. Weak housing and retail sales data in the UK added to the downward movement for the pound. A house price survey showed that 8% more of estate agents reported that prices had fallen and a retail sales monitor came in worse than expected. The house price data was the first time that house prices had fallen for the first time in a year and this raised concerns that the UK recovery might be faltering. Out later today in the UK, we have unemployment data on the number of people claiming unemployment benefits. This is expected to show a reduction of 17,000. In addition, later this morning, the Bank of England releases their inflation report which assesses the impact of the new coalition’s spending cuts on growth and inflation. This could be quite negative so get in touch to ensure you don’t miss out.

In the Euro zone, German monthly inflation came in marginally better than expected at 0.3% against an expectation of 0.2% but wholesale price inflation fell by 0.3%. In addition, monthly French industrial production data came in worse than expected and showed a 1.7% drop on last month. So far this morning, the pound has jumped against the euro to break through the 1.21/£1 barrier for the first time in a few days. There is very little data out in the Eurozone today so call in now for a live exchange rate.

In the USA, there were concerns at the beginning of the week that the Federal Reserve would pump further money into the economy to stimulate the flagging US recovery. The markets are still awaiting full details of the plan, but the Federal Reserve announced that it will take further actions to inject more money into the economy. This was an important shift in policy, as only a few months ago the Federal Reserve was talking about how to scale back the emergency stimulus. However, the recovery has not gone as well as expected and further stimulus is clearly necessary. The US dollar has hit a near 15 year low against the Japanese yen – get in touch now for a live exchange rate.

Elsewhere, Australian consumer confidence jumped 5.4% in August to the highest level in 7 months. Analysts attribute the boost in confidence to the Reserve Bank of Australia’s decision to keep interest rates steady. Get in touch now for a live exchange rate.

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