Another poor week for sterling, the US dollar is in the ascendancy | Smart Daily Currency Note
This week (Last week)
GBP/USD – 1.5268 (GBP/USD – 1.5542)
After another poor week for sterling dropping against all of its major counter parts and falling at one stage to a 15 month low against the euro and an 30 month low against the US dollar. The Bank of England (BOE) minutes revealed that three members on the Monetary Policy Committee (MPC), including the Governor of the BOE, voted for expanding the current levels of quantitative easing plus there had also been discussions about potentially cutting interest rates. More negativity was evident on Tuesday when rumours spread of a potential downgrade for the UK’s gold plated AAA credit rating. Whilst the overall unemployment rate did reach 7.8% in January, there are definite signs that the labour market is starting to recover. Employment reached an all-time record of 29.73 million in the last quarter of 2012 and the number of new people claiming unemployment related benefits dropped by more than expected. Sterling started to recover some of its losses yesterday as more positivity came when the Public Sector Net Borrowing figures came in better than expected with a surplus in January of £11.4bn (the largest in 5 years) and Industrial Order Expectations from Confederation of British Industry (CBI) were better than initially anticipated. With no significant data expected to be released today, you might expect a stable day for sterling; however, recent activity tells us how volatile and how unpredictable the markets can be, so call in today for the latest updates on sterling.
The US dollar started off quietly this week, trading in fairly a narrow range due to lack of data released in the states and the markets being closed for Presidents’ Day. However, it made strong gains later in the week reaching a 30 month high against sterling and a one month high against the euro following the release of the latest Federal Open Market Committees (FOMC) meeting minutes. The minutes outlined that the Federal Bank should be prepared to vary the pace of quantitative easing, thus normalising monetary policy – a sign that the central bank is looking at tightening monetary policy going forwards. The minutes however, didn’t indicate as to when quantitative easing may end. Yesterday we saw the release of core Consumer Price Index data (CPI) and existing home sales data which came out better than expected. It wasn’t all positive as the weekly unemployment claims and the Philly Fed Manufacturing Index came out worse than forecast. We have a quiet day in the states today although one of the members of the FOMC is speaking in the afternoon. Call now for the latest news and updates.