Smart Daily Currency Note | Euro continues to gain ground
GBP/USD – 1.6068
The turn of a new week failed to bring any cheer for sterling, as it continued its slide versus major trading peers. With little data released from the UK yesterday, the impact of considerably worse than expected manufacturing data released at the end of last week coupled with an increasing pessimistic economic outlook continued to have an impact, with the British currency falling closer to the key support level of 1.20 versus the euro; reaching a low of 1.2010 in the early afternoon. If we break through this level against the euro we could see a rapid weakening in sterling. Increasing speculation that the current account deficit has expanded to 3.5% of GDP has also sparked fears among traders, perhaps helping to explain sterling’s sudden fall versus its partners. Today sees the release of key Consumer Price Index (CPI) inflation data, with any increase above the current level likely to increase doubt about an economic recovery in the UK. Continued talk about a possible referendum of EU membership by David Cameron is likely to continue to influence the markets, so call in now for the latest news and for a live price.
The US dollar had a mixed day yesterday, touching a near two-year high against the Japanese yen and strengthening against sterling, but slipped elsewhere as traders bet on continued stimulus measures ahead of a speech by the Chairman of the Federal Reserve Bank. It is a busy day on the data front for the US today with key inflation figures released including the Producer Price Index (PPI) statistics which have disappointed for the last two months and the CPI data. We also have two sets of highly influential retail sales data released today as well as an address from one of the members of the Federal Open Market Committee. With a lot of data being released which will all be closely analysed by traders, we will have to see how the US dollar copes as it looks to regain on the Euro.
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