Smart Daily Currency Note | Euro strengthens, US dollar weakens
GBP/USD – 1.6254
During the course of yesterday sterling reached a three month high against the US dollar peaking at 1.6307; but, dropped to a two month low of 1.2240 against the euro. The Monetary Policy Committee meeting minutes revealed the members voted 8-1 against an increase in quantitative easing with one member voting for a £25 billion increase as risks from the Eurozone crisis is easing and inflation danger is persisting. The Bank of England did say however that the strength of the pound had been damaging the UK economy, which led some to believe the central bank is eyeing up another round of quantitate easing in an attempt to weaken sterling and boost exports. As expected, all members of the MPC voted to keep interest rates on hold at 0.5 per cent. Key data released today will be the monthly report on UK retail sales. As always, this will provide us with an early look at consumer spending levels in the run up to Christmas, and in turn a good idea of the overall economic activity in the UK, so call in and find out which way will this has influenced sterling today.
After the US dollar was sold off through much of the day, dropping to multi month lows against both sterling and the euro, some strength returned in the afternoon as key resistance levels were not broken. The Fiscal Cliff continues to dominate both the political and economic landscape, but President Obama said in the late afternoon that he was optimistic about reaching a deal, despite threatening to veto the speaker’s proposition. As noted yesterday we wait to see if the dollar follows recent trends when on hitting a low it quickly reverses the trend, gaining on occasion up to ten cents. This suggestion could be supported if today’s unemployment data continues the positive trend of the last few months. Get in touch now to book in the high rates while they last.