Smart Daily Currency Note | The US dollar continues to weaken
GBP/USD – 1.6268
It was a somewhat mixed day for sterling yesterday as risk appetite was the main driver in the market. Sterling was slightly down against the euro and Swiss franc, but renewed confidence that a deal would be struck regarding the so-called fiscal cliff in the US drove sterling towards a high point close to 1.627, its highest level since September against the dollar. A broad swathe of inflation data was released, most of which slipped below projections, however, the crucial consumer price index data came in at 2.7%, nearly half a present over the forecast figure, which gave some support to sterling as it decreased the likelihood of more monetary easing in the short term. Today’s financial news in the UK will be dominated by the release of the minutes from this month’s monetary policy committee meeting which some expect to deviate from the recent unanimous decisions on interest rates. If the market reaction to last week’s speech by the ECB president on changing interest rates is anything to go by, any change could see dramatic consequence. Get in touch now to find out which way sterling has moved.
The fiscal cliff continued to dominate the economic landscape yesterday, as it seems it will do until a concrete resolution has been agreed upon. Negotiations between the President and the Speaker of the House continue with the Speaker suggesting that he will go to Plan "B" if need be. The last time the US dollar was this weak we saw a rapid reversal in its fortunes, including a 10 cent reversal for sterling back in April/May this year as traders viewed sterling to be "overbought". Important construction data is released today could look to start such a reversal, but reaction will most likely be muted in the current uncertain landscape. Get in touch now to take advantage of the US dollar rate while it lasts.