Euro Pounds Currency News

Risk appetite gains momentum-sterling hits 3 week high against the dollar

2009-07-24T11:14:00.001+01:00

Friday 24/07/2009
• Risk appetite gains momentum-sterling hits 3 week high against the dollar
• Greenback sees aggressive sell off against majors as equity markets rally
• Euro has mixed day against majors—short term sell off blamed for losses
• World stock markets buoyant—corporate earnings spur investors to buy
• Commodity currencies continue bull run -Aussie, Kiwi & Cad dollars rally

US Dollar:
The dollar fell to a three week low on the pound, seven week low against the euro and Canadian dollar yesterday as riskier trades gained momentum and stocks rallied. The dollar fell to $1.6585 on sterling and just under the $1.43 level on the euro. Higher-yielding and riskier currencies are in favour after positive US data releases on Thursday and continued signs of economic recovery in second quarter earnings reports spurred risk appetite. That has led the safe-haven greenback and yen to sell off. Better than expected weekly US jobless claims was one of many numbers to come out which contributed to the bucks fall. We have seen the trend carry through into Asian trade this morning with massive dollar selling by big Japanese banks taking profit after the greenbacks rise over the previous weeks. It seems a large volume of dollar selling by two big Japanese banks was the notable move of the Asian market, which then prompted exporters and hedge funds to follow suit. Be aware of this aggressive move though as there are some dealers with the view that the greenback may get a boost from Japanese trust funds early next week. These funds have been rumoured to be preparing to invest in dollar-denominated assets very soon.

Data 15.00: University of Michigan Confidence expected at 65.0 from 64.6.

Pound:
Sterling was definitely one of the main gainers in the foreign exchange markets yesterday as continued rising risk appetite saw the pound sweep aside the dollar and euro with ease. We have seen a strong correlation with regards to the main world currencies and equity markets over the last few month, which looks set to continue for the short term at least. The Dow rallied, up nearly 2200 points and crossed the 9000 level for the first time since January and the FTSE is now above the 4520 level as players come out of the safe haven status of the dollar and buy into riskier trades, rallying the higher yielding currencies. Cable soared more than two cents to push through the $1.65 level, hitting an intraday high of $1.6585, and the pound saw a similar gain against the euro with sterling hitting an intraday high of 1.1664. This rally in the value of the pound has clearly been driven by the rise in risk appetite, whether externally driven or domestically driven, with supportive news from the economy. The worry is, the latter seems to be the lesser factor. In these kind of markets we have seen Currency Today clients benefit from placing ‘Buy Limit Orders’ capturing a spike in foreign currency purchases.

Data 09.30: GDP QoQ expected –0.3% from –2.4% & YoY expected –5.2% from –4.9%.

Euro:
The euro took a nose dive against the pound yesterday as the risk appetite animal continued to roar through the currency markets. At present, the euro seems to be slightly lower down the pecking order against the pound when the riskier trades creep to the top, which has seen the single currency post a 1% loss against sterling, pushing EUR/GBP down to 0.8573. Against the dollar there was a different picture, with the euro reversing course against the buck for the second time during a volatile New York session yesterday. The euro fell back from a fresh seven week high of $1.4292, approaching its 2009 high of $1.4339. Once the euro broke below
the closely watched technical level of $1.4260, traders sold the currency more aggressively.

Data 09.00: E/Zone PMI Manuf, Services & Composite. German IFO Expectations & Business Climate.

General:
• Commodity currencies have continued their push higher in the currency markets on the back of the rise in risk appetite. The Canadian dollar has also benefitted from the latest Canada Monetary Policy Report.

Sterling takes back losses against majors riskier trades back on

2009-07-23T11:10:00.000+01:00

Thursday 23/07/2009
• Sterling takes back losses against majors—riskier trades back on
• Asian players sell the dollar as stock markets continue to rally
• BoE minutes gives small boost to sterling—outlook on economy brighter
• Eurozone sees industrial orders weaken—GBP/EUR moves cent higher
• Yen takes a beating from euro & dollar on technical selling

US Dollar:
Stock markets continued their rally yesterday with Asian markets picking up the most gains, leading to a sell off for the dollar and yen. Asian players sold off the greenback against the euro and sterling, which has been seen many times before when the markets risk appetite picks up. This saw a fall in the dollars value by over two cents on the pound to break through the $1.65 level. The dollar also fell down on the euro as a cent was given up for EUR/USD to trade over the $1.42 level. The snapback rally over the last few days has been very much driven by second-quarter results coming in ahead of guidance, particularly in the US. Be aware that risk-trading trades have a habit of disappearing as soon as they surface. Appetite for risk could decrease if major US firms earnings due out later today are weaker than expected, and there are still worries about what will be the outcome of US CIT Group’s liquidity problems.

Data 15.00: Existing Home Sales expected 0.6% from 2.4%. Speakers 14.30: Fed's Tarullo.

Pound:
The pound managed to halt the slide against the euro and dollar seen earlier in the week yesterday as stock markets held firm, with Asian markets rallying overnight. The riskier trades were back on as investors sold off the safe haven currencies such as the yen and dollar in favour of the riskier currencies including the pound. This saw cable rally over two cents as we saw GBP/USD push back over the $1.65 level. Voltrex saw limit orders hit out at these levels through VFX (our online trading platform). There was also a cent gained on the single currency with GBP/EUR testing the 1.16 level. The pound was given a slight boost in yesterday’s morning session after the minutes of the latest Bank of England meeting suggested that , although the bank could still extend its quantitative easing next month, the outlook for the UK economy is probably a little brighter. Well, take that with a pinch of salt, as we have seen over the last few months, it doesn’t take a lot to spook the markets.

Data 09.30: Retail Sales expected 0.3% from –0.6% & BBA Loans for House Purchase.

Euro:
The euro gave up gains against the pound made earlier in the week as EUR/GBP gave up over 1% to trade at 0.8620. This seemed to be on the back of a combination of the BoE minutes which pointed to a slight recovery in the UK, the risk appetite move on the world currency markets and weaker than expected E/zone industrial orders. The factory orders showed a fall of 0.2% in May where economists were expecting a rise by 2.0%. The risk appetite move in the major currencies did however see the euro take up the reigns against the dollar as we saw a cent gained, pushing EUR/USD to trade close to the $1.4250 level.

Data 09.00: Already out E/Zone Current Account came in at –1.2B.

General:
• The yen took a beating in Asian trade this morning from the euro and dollar on technical selling and risk appetite coming to the forefront in the currency markets.
• Oil is higher as investors focused on Fed Chairman’s cautiously hopeful comments about the US economy, pushing Nymex crude up to $65.67 per barrel.

UK Threat of drastic tax rises and spending cuts after an election next year

2009-07-22T15:18:00.002+01:00

• Risk concerns reappear in the financial markets
• Financial conditions remain stressed despite stronger corporate earnings
• UK sees the release of MPC minutes this morning
• UK leads Europe in number of distressed companies#

US Dollar:
The dollar has regained recent losses against the pound and Euro trading into 1.6332 and 1.4178 respectively. This comes as concerns about risk resurface in the market. Shaun Osborne, chief currency strategist at TD Securities talking about Ben Bernanke’s (FED chairman) testimony said yesterday "Although the Fed chairman talked about exit strategies, his emphasis was on economic risks and this cautiousness did not sit well with currency traders," This risk concern was also highlighted by Kathy Lien, director of currency research at GFT in New York "Financial conditions remain stressed and despite stronger earnings, banks could face significant further losses," she said. To be fair this does not come as any great surprise to me as investors continue to move in and out of riskier currencies highlighting the fickleness of the FX markets.

Data : Bernanke gives second testimony at 15:00. Crude oil Inventories exp –1.9M Prev –2.8M

Pound:
The pound has been in gradual decline against the Euro this week moving down from 1.16 on Monday to the low 1.15 area this morning. We have also seen a downward move against the USD with the rate moving from a recent high of 1.6559 to it’s current level of 1.6322. The discussion on UK government spending is continuing to do the rounds this morning with The Times reporting a the looming threat of drastic tax rises and spending cuts after the election next year as the government finances remain in the red for at least another four years. The guardian also reported that the UK is home to more distressed companies than any other country in Europe. Its comes as no surprise that this less than optimistic news has hindered sterling further this morning.

Data: 9.30 MPC Meeting Minutes 11:00 CBI Industrial Orders exp –46 prev –51

Euro:
The Euro has moved down against the USD this morning with the pound as the markets concern over risk arises once again. Yesterday, the euro reached its highest level in seven weeks at $1.4278 and then retreated to end lower against the dollar, after risk-sensitive currencies in general reversed direction and ceded ground to the USD. Industrial orders (Change in the total value of new purchase orders placed with manufacturers) will provide a further insight into the manufacturing sector expected to see a pick up and signal of some recovery.

Data: Industrial New Orders 10:00 exp 1.9% Prev –1.0%

When will the penny drop? Prospects for the US dollar

2009-06-04T12:20:00.003+01:00

“For those of you that have a particular interest in the USD this post provides some detailed information. Paul Dawson a good friend of mine from the Institute of Economic Affairs (IEA) http://www.iea.org.uk/ provides us with this information”.

It is very difficult to predict turning points in history. George Soros was correct in 1992 IN SAYING that sterling could not survive as a member of the European exchange mechanism, making a lot of money in the Process. Although he has not been as lucky with his Russian investments to say the least.

I like to look at the lessons of history and have been intrigued by the recent visit to china undertaken by the US treasury secretary Tim Geithner. I am prepared to stick my neck out amidst speculation about establishing a new world currency. China sorts out its economy by moving away from exporting and stimulating domestic demand while at the same time reforming its quasi governmental banking sector then the Chinese currency - the twenty first could become the next major reserve currency by the middle Of the twenty first century supplanting the dollar which has assumed this role since World War 2.

Tim Geithner gave a lecture at Peking University at which students openly questioned him about the safety of Chinese assets held in the US and laughed when he replied,

"Chinese assets are very safe." ref Financial Times 2/6/2009

Although many might argue that it is too early to say this could be seen as a turning point the economic facts confronting the US are not sanguine. At some point, currency markets and the individuals who operate within them will realise that something significant has changed in the way in which the US economy operates and after the proverbial penny drops their reaction will be swift and dramatic.

Currently the US and Chinese economies exist in a symbiotic relationship with US consumers buying cheap goods made in China (rather than the US as was once the case) and the Chinese investing the proceeds in US assets. According to the FT of 2/6/2009 94% of their foreign currency assets are held in US$ assets and only 6% are directly invested. Also, 70% of the $2,000 billion in foreign currency assets are held in US government bonds.

For the Chinese and other overseas governments the dollar is a global currency and US overnment bonds are perceived to be both safe and highly liquid. What the Chinese government and other investors are starting to realise is that the US economy is not the hegemon it once was and at some point they will decide to begin switching out of dollars and US bonds. This will not happen overnight as the sums involved are very large and as with trying to get a supertanker to change course any movements will initially be difficult to e.g. have also to decide where else they would like to invest as e.g. the euro has its own problems and gold is limited in supply.

Concerns about how long the US would remain a superpower were first raised by historian Paul Kennedy in his 1987 book "The Rise and Fall of the Great Powers" where he predicted that US military overstretch around the world and the cost of running its military machine would undermine the rest of the economy. Events did not turn out like that but more recently both Alan Greenspan in "The Age of Turbulence" and Niall Fergusson in "Colossus" have both expressed grave concerns about spiraling US public debt arising not just from defence commitments but more worryingly from growing healthcare and social security costs as the postwar baby boom generation starts to retire.

The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500-2000 (Paperback) Paul M. Kennedy (Author)

The concern is that notwithstanding the pledge by the Obama administration to reduce the fiscal deficit to 3% of GDP (whereas in 2009 it is expected to reach nearly 13% of GDP - ref FT 3/6/2009) this will involve some very messy political decisions and the electoral cycle may force such decisions to be put off until another day.

The other problem is that the need to issue more public debt during an economic downturn could at some point precipitate a re-rating of US debt by the credit ratings agencies. Should this happen it would have a catastrophic effect on investor confidence. Bond yields would rise as their prices fell and the US government would have to pay higher interest rates in order to secure the necessary funding. The other danger is that as more debt is issued the cost of paying the interest on that debt can rise exponentially. These concerns have been raised by the US bond fund manager PIMCO and I attach a link to the recent Investment Outlook written by Bill Gross.

Staying Rich in the New Normal

Large scale debt issuance is also inflationary and for those of you who appreciate country music May I take this opportunity to draw your attention to a new song by Merle Hazard with the lyrics,

'Inflation or deflation,
Tell me if you can,
Will we be Zimbabwe or will be Japan"

http://www.merlehazard.com/Merle_Hazard/Home.html

Enjoy the song but don't expect the long term prospects for the US Economy to be anything to sing about.

Best wishes
Paul

Currency Today

Sterling falls after Bank of England Quarterly Inflation report

2009-05-14T13:17:00.003+01:00

Thursday 14/05/2009
• Dollar makes gains as major indexes post biggest loss since April 20th
• Risk aversion reappears on weak US retail sales report to rally the buck
• Sterling falls after Bank of England Quarterly Inflation report
• Industrial production in E/Zone slumps, weakening the euro
• Oil prices lower after a plunge in US stocks & weak US retail sales posted

US Dollar:
The dollar gained versus the euro and sterling yesterday after major equity markets had their biggest losses since April 20th and an unexpected drop in retail sales hurt consumer shares. Risk aversion jumped straight back into the market and spooked investors back into the safety zone of the yen and dollar. This pushed the greenback up by a cent on sterling to trade at $1.5122 and over a cent against the euro to trade around $1.3568. The worse than expected data will add a cautious note to trading and put a question mark on ‘green shoots’ hopes. While the dollar benefited from a decline in riskier rivals yesterday, there are persistent concerns over the greenback that have market analysts questioning how safe this traditional safe haven will continue to be. A report from China showing industrial production data wasn’t as robust as expected also helped bring risk sentiment back into the market, adding to the dollars more attractive position.

Data 13.30: PPI MoM & Initial Jobless Claims

Pound:
The pound started the day off yesterday fairly strong against the dollar and trading sideways against the euro, until the release of the Bank of England Quarterly inflation report at 10.30am. The central bank cut its forecasts for growth and raised its estimate for future inflation as it published its findings. The bank said the weaker profile for growth reflected a weaker than expected performance in Q1. In the bank report, inflation looks set to fall back below 2% later this year, putting a halt to expected interest rates rises anytime soon. This was also a reason
for the pound to be sold off. This saw the pound plummet against both the dollar and euro, with over a cent down for cable to hit $1.5148. Against the euro, we saw a small drop, but this was steamed to an extent after the eurozone released its own weak economic data, pushing GBP/EUR below 1.11.

No data.

Euro:
The euro was under pressure yesterday which kicked off with risk aversion coming back into the market, staring in Asia and spreading throughout Europe, with the dollar pulling back its losses on the single currency. The euro then released it s own bag of trouble in the form of the E/Zone Industrial Output report which showed that industrial production in the 16 countries that use the euro slumped to a fresh record low on the year in march, as output declined across all sectors and in major eurozone economies. EUR/USD fell from $1.36874 to $1.3585. The euro did see some gains on sterling, after the UK released its quarterly inflation report, which was a signal to
players to sell the pound. This saw EUR/GBP push through the 0.90level, but has given up some of those gains this morning.

Data 09.00: European Central Bank Monthly Report.

General:
• Oil prices are lower this morning after a plunge in US stocks and weak retails sales in the worlds biggest economy cut short a recent rally. Nymex crude fell 29 cents to $57.73 per barrel.
• Gold is retracing some early losses, yet is still down 90 cents to trade at $925.20 per troy ounce.

Currency Today

Bank of England left rates unchanged at 0.5%

2009-05-07T12:22:00.000+01:00

The Bank of England left rates unchanged at 0.5% as expected today, but did add there was to be another £50bn pumped into the economy. This initially seems to have reduced the pounds position against the dollar and euro, but sterling is still managing to hold onto gains made earlier this week.

Given rising evidence that the worst of the U.K. recession may be over and given the ease with which the pound broke back over key resistance at $1.50, sterling back up towards $1.55 looks like a real possibility along with the 1.15 mark against a weaker Euro. The recent data releases are perceived as indication that the U.K. economy is no longer in meltdown mode but 'just' facing a nasty but more normal recession. Of course, downside risks for the pound remain. Not all the U.K. economic news is likely to be positive; a rise in global risk aversion could still take its toll and concerns over how the U.K. will fund its public sector deficit will continue to pose a threat.

Let's hope the Euro rate continues to improve, I have to say my recent trip to Pons in France over the bank holiday was noticeably more expensive at 1.09 (on my travel money) but the seafood, booze, sunshine and laughter certainly made up for it!

Currency Today

The Uk Pound comes under pressure from possible budget statements

2009-04-20T16:12:00.002+01:00

The dollar is trading much higher today as risk aversion (investors avoiding risk) proves the dominant theme in currency markets in advance of this week's U.S. bank stress tests update.

Stocks, a key indicator of risk sensitivity in global markets, are on the retreat, with European indexes lower and U.S. stock futures also in negative territory. U.S. stocks are off...on the index futures, and that's having all the normal knock-on effects across the other currencies," said Adam Cole, chief currency strategist at RBC Capital Markets in London.

Over the weekend, the Obama administration appeared to be taking a more cautious tone, with the president suggesting that further government support may be needed as a result of the stress tests on the U.S. banking community. That encouraged investors to again shy away from high-risk asset markets with most equities making minimal gains and the dollar and the Japanese strengthening.

The U.K. pound has come under pressure by risks associated with this Wednesday's budget statement. The euro is also on the retreat after European Central Bank President Jean-Claude Trichet's suggestion the bank will cut rates by 25 basis points as well as apply nonstandard monetary easing at its next policy meeting in May. This has helped moved the USD strengthen against the Euro but has seen the opposite happen with the pound against the Euro now trading at 1.1254, over one cent down from the 1.1372 recent high seen on Friday.

According to the Guardian on Friday Trade minister Mervyn Davies said today he is not worried about the pound declining in value, saying that a weak currency will help drive the British economy out of recession. The article also mentioned that The pound's decline reflects the economy's vulnerability during the global financial crisis and economic downturn because of its heavy reliance on financial services. This has clearly been reflected in the pound’s weakness against the Euro since news of Northern Rock was released in 2007.

See the article on the link below:
http://www.guardian.co.uk/business/2009/apr/17/pound-mervyn-davies-recession

I also feel that sterling and the UK economy in the same way will see a fast recovery in employment and growth when the global and US economy in particular start to “turn a corner” for the better.

Talking about “turning a corner” my work 5 a side team got our first win last week (9-4) perhaps aided by my shouting of “we are winners” (this one got lots of laughs!) and “keep up the pressure” as I defended like my life was on the line and scored a couple of goals. Bring on Wednesday evening…

Toby Fischer
Currency Today

Sterling continuing to perform

2009-04-15T14:02:00.000+01:00

The pound has continued its rally against both the dollar and the euro in this morning's trading, aided by positive housing data released this morning for the UK by the Royal Institute of Chartered Surveyors. We have also seen negative data from the euro zone today in the form of a German think tank lowering its projection for German GDP, weighing down the single currency and Weber (a European Central Bank member) states the European Central Bank has a bit more leeway to lower interest rates at which it provides liquidity to banks.

We are currently trading for GB POUND /EURO at 1.1328. Sterling against the US Dollar is also rallying and the key resistance level was briefly broken above 1.50 earlier before moving down to 1.4930. Be aware that market attention will now likely focus on a rash of new data from the U.S. later in the day, including industrial production and CPI (inflation) which is expected to show another monthly decline.

Let's hope the pound maintains its strength but always be prepared for sharp moves back down if UK data starts to disappoint again. Have a great day and let's hope our English team's Man Utd and Arsenal play as well as me at my 5 a side football game tonight.

Currency today

Sterling remains stronger against Euro but don’t be fooled

2009-04-09T10:31:00.002+01:00

Sterling has been heading north against the Euro since the 27th March (1.06 to 1.11) and it is very easy to get carried away with this positive move and maintain “a false sense of security” that the rate will continue to go up.

Well firstly we need to look a little deeper as to why this has happened in the last few weeks and the outlook for sterling. One of the main reasons for continued Euro weakness against the pound today was down to poor data for German (the powerhouse of Europe) as exports fell for a fifth month by 0.7%. The market clearly did not take this news well for the Euro as despite the rate holding up domestic news for the UK continues to mainly disappoint.

The GDP report showed our economy shrunk by 1.5% in quarter one of 2009 resembling the 1979 recession and although the economy has started to show some signs of life more recently, the deteriorating employment market is likely to lower expectation and confidence in a quick “bounce back” for our economy.

The bank of England’s quarterly credit-conditions survey showed that banks expect a rise in mortgage availability in the second quarter, and that there was greater credit supply to companies in the first three months of 2009, some positive words…

Interest rates are expected to stay at 0.5% tomorrow as the Bank of England has little room to move whilst it observes the evidence that recent actions (including quantitative easing – printing money) are having the intended effect on the economy or perhaps need to be supplemented. If the Bank indicates that more needs to be done such as further easing measures then sterling could easily weaken off again.

The problem we have here in the UK is our clear exposure to overseas events reflected in the condition of our economy (a rapid slow down!) and currency as the global economy slows. Normally you would expect a sharp depreciation in a currency to aid manufacturing as our products become more attractive to buy overseas. However this sector has not benefitted from a weak pound as the euro zone and US economies show a drop in demand.

Despite tomorrow being the last day of the working week thanks to Easter (lots of relaxing for us all!!!) expect some volatility in the pound vs the Euro and if the rate is continuing to concern you as your deadline becomes closer my advice is to “lock in a rate” for some or if not all of your requirements over the next month or so to protect you from sharp unexpected drops in the rate.

Happy Easter.

Toby
Currency Today

Sterling (and me) surviving!

2009-04-01T16:26:00.003+01:00

Hello and good afternoon from my "city" desk in Bishopsgate.

Sterling has picked up a little from yesterday against the Euro and USD. After trading within the 1.07 range at the beginning of the week the pound edged up to high of 1.0919 on the day but is now trading lower at 1.0840. Against the USD, sterling pushed up to a high of 1.4432 by mid day before trading lower at 1.4355 near similar levels achieved towards the end of trading yesterday.

This came after the UK produced some positive economic news for a change. The UK purchasing managers index (It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy) increased to 39.1 from the forecast figure of 34.9. This is regarded as fresh indication that perhaps the government's efforts to stimulate the economy and get the banks to lend may be working.

Without sounding like a "kill joy" be careful not to read too positively into this news for the UK and sterling as our economy continues to look vulnerable. Any poor news such as Nationwide house price data due out for the UK in the morning could easily remove these gains.
On to me, although there is "protests" going on outside my office courtyard entrance at St Helens Place (I can't hear anything) on Bishopsgate, I was still able to grab a sandwich at lunch. The experience for me with singing, live music and dancing reminded me more of Notting Hill Carnival than a serious Protest. I have however heard news of trouble at RBS and the Bank of England, so hopefully our end of the city will stay calm.

I'm off to watch England at Wembley tonight, if I can get out of my office!!! Have a great evening.

Pound Euro exchange rate = 1.0840

The uk pound is about to tank?

2009-03-29T23:38:00.003+01:00

The week ahead looks interesting “to say the least” in the financial markets and the pound doesn’t look like it will escape any trouble. Towards the end of last week sterling touched into the 1.05 area before rebounding on Friday afternoon.

We are currently trading into 1.07 a considerable distance from 1.15 recent highs. Many market participants believe with high volatility due in the coming week, sterling should push sterling down into 1.05 and below, breaking resistance on the road back to parity.

Recent highs for sterling occurred on the back of Euro showed weakness, with the pound remaining strong for little reason. The pound vs the Euro for a long period was a currency pair that traded in very small ranges (circa 1.25), as the Euro and the British Pound moved very similarly against the US dollar. Since October, last year this trend changed, and pair has moved wildly and now looks to be soon testing the 1.02 level seen on 30th Dec 2008.

This week’s events, with the G20 summit , rate decision by the European Central Bank (on Thurs) and lots of UK figures (including housing and manufacturing) provide lots of opportunities for sterling to fall into dangerous territory. It is clear that the UK economy is shaky and that Europe’s economy is much healthier (I’m sure many of you disagree).

The question now back on the agenda for a second time is parity; this was nearly achieved at the beginning of 2009 and I do believe that as we near the end of March and quarter 1, we can get close to this level again against the Euro. Either way, don’t be surprised if we see massive volatility in the markets this week.

I just hope I can get to work this week without being “egged” or “yelled at” as I found out the other day that one of the G20 related targets is about 30 seconds away from the work in Bishopsgate. Oh well, life goes on…

Have a fantastic week and thanks for reading.

Sterling trading lower in late afternoon session

2009-03-25T17:32:00.003Z

Today has been an action packed day for sterling against the Euro and US Dollar and after high volatility rates are trading within lower ranges. Sterling initially traded at 1.0894 this morning against the Euro, the rate is now trading back into 1.07 at 1.0720. Against the USD we are trading at 1.4533 from the 1.4738 spike we saw at 2pm this afternoon.

The “tussle” between the Bank of England (it’s governor) and the government has placed pressure on sterling since Mervyn’s Kings speech and comments yesterday. The inflation data which came out yesterday (higher than expected) and gilt auction shows that there are clearly side-effects from the US style policy of rapidly cutting interest rates and raising government borrowing sharply. This side effect comes in the form of lost confidence in the UK and the pound by overseas investors. Credibility is important in coming months as we assess the results of the government’s fiscal actions and Bank of England’s monetary policy (interest rate decision) which could see sterling deteriorate. The press are now firmly on this debate (I say this whilst yawning)

The potential vulnerability to the UK was illustrated by the latest gilt auction showing weak demand today because this poor result will increase fears over structural vulnerability and weak capital inflows (foreign investment)

The Uk is better placed to ride out the recession than any other country?

Tomorrow sees key data releases at 9.30am with retail sales expected to be weak at minus -0.3%, any weaker number here would spell further trouble for the UK and a weaker currency. We also have nationwide house price data over night for the UK likely to highlight further falls in house prices as more and more unemployed have difficulties repaying mortgages.

12.30opm sees the highlight of US data in unemployment claims which could weaken the USD is these come in higher than the 649k expected. However because of the range of factors affecting the USD price it’s always a difficult one to call. Nonetheless I am expecting the GBP/USD rate to dip below 1.4500 and possibly 1.07 against the Euro.

For those music lovers amongst us I have just purchased 6 tickets for me and my mates to attends this year’s Camden Crawl and after last year’s fun, rocking and drinking in some of Camden’s most atmospheric venues I can’t wait! Even better I have just found out the Yeah Yeah Yeahs are playing

Introducing Toby Fischer and Currency Today

Exchange rate, what exchange rate!.....

2009-03-19T11:43:00.002Z

King said he was not interested in "fancy models" as a guide to policy but those are precisely what he and his colleagues have been using, and why things have gone so wrong.

See following image to relate!!!

Sterling looks for direction

2009-03-17T19:26:00.002Z

Today has been a reasonably quiet day for sterling against the Euro moving in a range between 1.0778 and 1.0864 and 1.4138 to 1.3965 against the USD. More significant data for the UK us due out at 9.30am including the claimant count (change in number of people claiming unemployment) which is particularly relevant at the moment and the BoE minutes which will provide further insight in to the bank’s reasons for slashing interest rates earlier this month. I am expecting the unemployment number to be have a high impact on sterling especially if the number is far higher than 84.5k expected.

We also have key inflation data (CPI) for the US in the afternoon at 12.30pm so expect volatility around these periods. If for any reason your sad like me and rejected a drinking session with your work mates for a few more hours in the office how about celebrating St Patrick’s day by watching this short clip (link below). I know it is rubbish but someone must like it, it’s had over 100,000 hits!

Toby Fischer Currency Today

2009-03-12T23:12:00.002Z

Hello and good evening.
The pound for all you sellers is continued to stay low against the Euro today. Against the Euro trading has been within 1.07 for most of the day seeing a low of 1.0734 this afternoon before reaching a high of 1.0814, the rate is now lower on the day at 1.0783. Against the US Dollar we have seen the rate trade in the 1.37 range for most of the day up until late in the day where we have seen a push up to 1.3913 (its current level)

There was little out in the form of data for the UK and Euro zone today allowing the US data to take over at 12.30pm. Core US retail sales (excluding cars) came in more positive than expected up 0.7% against -0.1% forecast in addition to the retail sales number which was less severe at -0.1% against -0.5% forecast.

To counter act this unemployment claims were higher at 654k against forecast of 642K, no great surprise there!

According to Bloomberg U.S. household wealth fell by a record $5.1 trillion from October to December last year which was almost twice the fall in the previous quarter, this was a direct result of home values and share prices plunging.

The erosion of Americans’ wealth is one reason that analysts project households will save more in coming months, restraining spending and economic growth in the US.

A slowing of risk aversion (where investors buy US Dollars) has weakened the USD in the later part of today pushing the rate back up in 1.39; this is clearly US Dollar weakness rather than any pound strength. However, the USD is likely to remain strong whilst financial market uncertainty prevails, as “frightened investors” flee to this currency.

US economic data is the highlight again tomorrow as the US trade balance (Difference in value between imported and exported goods and services during the reported month) figure is released at 12.30pm. The figure is forecast lower than the previous month at -38.3B, although this may come in higher as exports are hampered by the strong USD. The USD is an extremely expensive currency to buy right now putting off purchases from other countries including the UK. Expect volatility in the afternoon with a test at 1.40 a possibility.

Is you are staying in tomorrow perhaps because you are superstitious or saving a few bob? Don’t forget to watch Comic relief and the brilliant sketch involving James Corden (http://en.wikipedia.org/wiki/James_Corden) briefing the England team. For those that are partying hard and going out I have put a link to this sketch that I found online below (just don’t tell anyone)
http://link.brightcove.com/services/player/bcpid15385170001?bctid=16261033001

Thanks for reading.

Sterling continues to tank again a basket of currencies

2009-03-10T17:59:00.002Z

Today, has seen another day I would rather forget for sterling. Just as I thought there may be a chance for the pound to regain some of its astronomical losses made yesterday, UK manufacturing came in at -2.9% drastically lower than the expected figure of -1.5%. So why is this so relevant? Well manufacturing makes up around 80% of total industrial production for the UK. It is a leading indicator of economic health (and the UK has more than a “cold”) Production reacts weekly to peaks and troughs in the business cycle and is correlated with consumer conditions such as employment levels and earnings. This in turn has resulted in expectation for a further drop in our next GDP number (growth) resulting in a deeper recession.

The pound against the Euro hit a low of 1.0814 early afternoon, before recovering very slightly to 1.0834 this evening. Against the USD the rate hit a low of 1.3765 overnight before hitting a high of 1.3904 in the afternoon. We are now testing the lows once again at 1.3789.

Tomorrow sees more UK data at 9.30 with Trade Balance due (Difference in value between imported and exported goods during the reported month) . This is not expected to have as bigger impact especially if the number is in line with -7.5B forecast.

We also have some Euro data out at 11am for German factory orders and US government spending vs income data (Federal Budget) in the US at 6pm.

With less data out this week I am expecting sterling to push slightly higher against the Euro and USD as the market settles before much bigger data due out for the UK next Wednesday (18th March) in the form of Bank of England minutes and unemployment numbers (oh dear!).

I’m off to watch the Liverpool champions league match and forget about the pound for the evening. Have a good one!

Thanks for reading.

Sterling v Euro = 1.0834

Introducing Toby Fischer and Currency Today

Sterling hit hard.

2009-03-09T15:29:00.002Z

Today, unfortunately guys and girls, has been an awful day for sterling and guess what, it's the banks again! One headline I have recently seen simply read:" British banks pound the pound"

The rate against the US Dollar started the week down - breaking the 1.3950 level, as bad news for our banks continue, and the government holds a bigger piece of the pie or what they call nationalisation! First Northern rock then HBOS, Barclays, RBS, HSBC and now Lloyds TSB. Further bad news for our banking sector, a key contributor to growth in the UK has also hit the GBP/EUR rate where we are now trading at 1.0919 or 0.9158p to 1 Euro.

Other bank news includes, HSBC investor fears that the huge financial group base in London will have to erase assets due to bad loans creating further losses reflective in the share price falling today. Expect more volatility for sterling this week starting at 9.30am tomorrow after the release of manufacturing data (It's a leading indicator of economic health - production reacts quickly to ups and downs in the business cycle)

Updated rate:
Pounds to Euros = 1.0902

Good news to look forward to this week is the release of Michael Jackson concert tickets in London this summer, on Friday morning. Here's one of his more recent records to lift us all up: http://www.youtube.com/watch?v=8k0GZaPPkf4

Things improving for sterling?

2009-03-06T08:43:00.003Z

Thursday saw some interesting but some what predictable results in economic data reflecting in the movements of the pound against the Euro and USD. After initially falling to a low of 1.1187 against the Euro post UK rate announcement (forecast 0.5% cut) sterling is now trading back up slightly above Thursday's average at 1.1256. Against the USD the moves have been more extreme and short lived, the day started nicely for sterling at 1.4233 before falling to 1.4039 around that magical time of 12pm. We are now trading higher at 1.4123 as the market decides on which direction to go next.

After sterling saw another interest rate cut to almost zero for the UK at 0.5% many clients today were asking why hasn’t the pound fallen rather than risen. Well we did see an initial fall on the announcement but after the market settled sterling looked like it was in a better “mood” by the end of the day. To be honest how much worse can the pound get? I know this a dangerous question to ask but I am personally with the feeling that we will see a mini recovery in the coming months. As the Euro zone’s biggest export client, The Euro’s strength combined with an economic slow down is seriously damaging the economy. This slow down concern was evident in the ECB’s decision to cut interest rates by the same amount in the Euro zone.

Mervyn King, the Bank of England governor, said it was unlikely that bank rates could go any lower and policymakers would shift focus to creating money instead. "We are very close to zero. What we are doing now is switching to injecting money into the economy directly." This action should help unfreeze the credit markets which should in turn filter through to the consumer and “starving” businesses as well as save jobs.

Today sees more inflation related data, PPI Input (Change in the price of goods and raw materials purchased by manufacturers) in the UK at 9.30am and the biggest data of the day is non farm payroll data (jobs created outside the agricultural sector) in the US at 1.30pm so expect volatility around these periods.

Changing the subject to music I am going to make a prediction of who will be big in music in the next few years and my bet goes on VV Brown. I have been following her since autumn last year mainly because of my love of her 50’s style clothing and retro style (I love anything 50’s, 60’s and 70’s). Check out her site here: http://www.vvbrown.com/. What’s even more strange is that when I went to buy tickets for her show in a tiny little venue in Shepherds Bush http://www.bushhallmusic.co.uk I discovered she is doing a mini tour with Gary Go (http://www.garygo.com) also known as Gary Baker who was a fellow pupil at Watford boys grammar school with me, good luck Gary.

Thanks for reading.

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Sterling holds firm against dollar & euro despite potential rate cut.

2009-03-05T10:41:00.003Z

Pound:
Sterling is holding its ground against the euro and dollar this morning, despite the prospect of an interest rate cut hanging round its neck. It seems the widely publicised story that a rate cut is imminent has been built into sterling's value, and we may not see too much of a negative move, should the BoE cut rates around midday.

The pound has managed to claw back over one and a half cents on the dollar since it dropped below $1.40 on Monday, now trading at $1.4173. We have also seen the pound gain one and a half cents on the euro since early in the week, now trading at 1.1250. With today’s interest rate decision by the Bank of England, we are also expecting to find out how the bank looks to move ahead with the so-called ‘quantitative easing’ (QE). In other words, to print money in an effort to curb the economic slump.

Data 12.00: Bank of England Interest Rate Decision expected 0.50% from 1.00%.

Euro:
The euro slipped against the dollar and pound yesterday and has continued into Asian trade this morning, as players expect the European Central Bank to cut its interest rates by half a percentage point later today. The talk is that the ECB has room to cut its rates by at least 1% from the current 2%. Players will all listen closely to ECB President Jean Claude-Trichet in his press conference after the rate decision, to see whether he will signal further rate cuts ahead.

The euro has now lost over one and a half percent on the pound to trade at 0.8873. Against the dollar, the euro did lose over one and a half cents to hit an intraday low of $1.2456 yesterday, but has since fought back to over $1.26 this morning.

Data at 10.00: E/Zone Household Consumption QoQ expected –0.2% from 0.0%. 12.45: European Central Bank Interest Rate Decision expected 1.50% from 2.00%.

General:•
Chinese Premier Wen Jiabao, who unveiled the country’s economic roadmap for 2009 at the opening of the NPC, pledged to keep economic growth around 8%. This may help more risk sensitive currencies as global appetite is buoyed on the hopes of an up turn in China.

• Oil prices are higher today, building on overnight gains on signs that demand in the US and China could strengthen. Nymex crude rose to $45.50 per barrel.

UPDATE:
The Bank of England have cut interest rates by 50 basis points as expected. This has now left the base rate at 0.50%. In the run up to the rate decision, sterling was sold off against the euro and dollar, but has levelled out around 1.12 and $1.4050 respectively. The central bank has also agreed to push ahead with quantitative easing with an amount of £75bn of assets. This looks like it will be done by buying back government gilts using their reserves.

This should help stimulate the economy and in turn improve the strength of the pound over time as well as reducing my mortgage payments further!

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Best Currency rate for US Dollars
Pounds to US Dollars

Sterling trades within small ranges vs. US Dollar and EURO

2009-03-03T23:30:00.003Z

Hello and good evening.

We have seen relatively small movements for the pound against the Euro today, dare I say it a relatively “dull day of trading”. After initially falling to a low of 1.1118 against the Euro by mid morning, sterling is now trading back up towards 1.1200 at 1.1285 and 1.4035 against the USD from a low of 1.3983 but still way lower than the day high of 1.4132.

The USD seems to be continuing to benefit from a poor performance in the UK and US stock markets in the last few days forcing the pound to remain low.

"There's no getting away from the plunge in stocks. Currency's can't really perform on the basis of local fundamental factors as long as slumping stocks dominate market sentiment," said Steven Barrow, head of G10 strategy at Standard Bank in London.

The market is continuing to hold out for Thursday’s interest rate announcements in the Euro zone and the UK with both economies expected to slash interest rates by 50 basis points. Our bank has cut interest rates by 4% since October 2008 and unanimously decided at its last meeting to request permission to initiate quantitative easing (effectively printing money), More details on the exact timing of this are expected to emerge after the BOE meeting this Thursday.

Overnight for the UK sees the Nationwide consumer confidence survey released (Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity) as well as the more important services PMI data at 9.30am (Survey of purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;) If this number comes in lower than the expected 41.6 expect sterling to be vulnerable.

In the US at 3pm see ISM Non-Manufacturing PMI (It's a leading indicator of economic health). Expect some volatility late afternoon in the GBP/USD rate after this release.

Please feel free to send me an email or post on this blog if you have any questions on the subjects I cover or in relation to foreign exchange. If you would like to see a happy West H am fan (next to a legend), see a photo of me after Sunday’s win, come on you irons!

Thanks for reading.

Sterling sees large losses against the dollar and euro.

2009-03-03T14:16:00.005Z

Pound:
Sterling was given a hiding yesterday as the pound took flack from all sides. Early in the day we saw weak data from the UK in the form of mortgage lending plummet by 60% during January to just one 10th of its level 12 months ago. UK net lending also slumped in January, growing at its weakest rate since the series began in 1993.

The FTSE dropped 5.33% to its lowest level since March 2003, with HSBC shares falling almost 19%. The pound was sold off against its major rivals, with a four cent loss posted on the dollar to drop below the $1.40 level. Sterling's position against the euro mirrored the fall in cable, as the pound lost 2 cent to trade at an intraday low of 1.1099. The run for cover in financial markets also pushed sterling down, as risk aversion ruled the day, rallying the greenback as the king of the safe haven currencies. The up and coming interest rate cut expected by the BoE later this week, with talk of a shift towards quantitative easing is also keeping the pound under pressure.

Data 09.30: PMI Construction expected 34.2 from 34.5.

Euro:
The euro was under pressure versus the dollar yesterday after eurozone leaders failed to agree on an aid package for Eastern European countries and due to heightened risk aversion on data.

Manufacturing activity in the eurozone contracted for the ninth consecutive month in February, hitting a fresh record low that was below economist expectations. The drop in equity markets also scared investors to dump the euro and take cover in the form of the greenback, pushing EUR/USD to an intraday low of $1.2539. The euro has risen slightly in this mornings trade against the dollar as the Australian central banks unexpected decision in to keep interest rates unchanged raised market appetite for riskier currencies such as the euro. The single currency
has faired better against the pound, as sterling was sold off across the board after its own wraith of weak economic data. The euro took nearly two per cent of the pound to trade at 0.9009.

General:
The Reserve Bank of Australia kept its interest rate decision unchanged at 3.25% Tuesday, saying that Australia is faring better than other nations and that fiscal and monetary policy steps taken so far are sufficient to support the domestic economy. This caught players off guard as they rushed to buy the Australian Dollar against the US dollar and yen, which in turn, triggered buying of the euro and other riskier currencies including the NZ dollar and the pound.

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Best Latvian Lats exchange rate
Pounds to Latvian Lats

Fears of credit downgrade of major E/Zone bank drags down euro.

2009-03-02T13:19:00.002Z

Pound:
Late last week saw sterling rally against the dollar with a couple of cents gained to trade over $1.43. This has since been given up as players have ran for the cover of the buck, with the see-saw risk aversion play coming back into investors plan. Cable has lost ground in early trade as we have just broken through the $1.42 level. In early Asian trade, we did see the pound up on the euro and was testing the 1.1350 level, but since UK markets opened, sterling has seen some selling off, with a drop to 1.1288 already.

The pound is benefitting from an under fire single currency, with the eurozone having to digest problems with possible downgrades on its banks and problems with Eastern European countries with their own financial problems. Looking ahead to this week, the Bank of England is set to cut interest rates again Thursday, with all but one of the economists surveyed by Dow Jones expecting a 50 basis point cut. As before, this does already seem built into the market, with sterling managing to hold onto recent gains on the euro.

Data 09.30: Net Consumer Credit expected 0.5B from 0.3B, Mortgage Approvals expected 33k from 31k & PMI Manufacturing expected 35 from 35.9.

Euro:
This week has seen the euro continue to be under pressure from its major rivals as risk aversion has pushed the euro down against the dollar, and continued stories of banking problems in the eastern European states is keeping the single currency pinned down against other currencies, including sterling. The next source of event risk for the euro is likely to take the form of an actual credit downgrade of a major eurozone bank or the failure of an eastern/central European bank. Persistent risk aversion that is particularly provoked by eurozone related issues is expected to trigger a break of $1.24 and onto $1.2360 on the dollar. Looking ahead to this week, the ECB is widely expected to reduce interest rates by 50 basis points to 1.5% on Thursday.

Data 10.00:E/Zone CPI Estimate 1% from 1.1% & Italian CPI Index MoM expected 0.1% from–0.1

General:
Gold is $11.80 higher from New York Friday, at $951.40 per troy ounce.
• AIG is to receive up to $30B in additional funds.
• Share in Lloyds Banking Group dropped 22.3% Friday after it failed to clinch a deal with the UK government.

Pounds to Euro = 1.1262

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Best Romanian Lei exchange rate
Pounds to Romanian Lei

sterling is now trading at 1.1265 and 1.4300 against the USD from a low of 1.4112.

2009-02-27T17:52:00.004Z

Hello and good evening.

We have seen a better end to the week for sterling since 3pm today both against the Euro and USD. After initially falling to a low of 1.1181 against the Euro, sterling is now trading at 1.1265 and 1.4300 against the USD from a low of 1.4112.

It looks as if dollar buying has reversed once again this afternoon as investors sell the safe haven of the USD and take on more risk. Confirmation came in only an hour ago from the US that the government has taken a dramatic step to help the crippled banking sector by taking their stake in one of the largest banks Citi group to 36%. This has also helped the pound, seen as a riskier better in times of financial turmoil and uncertainty. The main highlight of US data included 4th quarter GDP which fell the most since 1982 showing the strains on the real economy since the financial crisis started in 2007.

Next week’s key data for the UK comes in the form of housing and manufacturing data due out Monday morning, service sector (economic health barometer for businesses) due on Wednesday and the bank of England interest rate announcement on Thursday.

In the US have manufacturing data on Monday afternoon, pending home sales on Tuesday, unemployment claims and non-farm payroll data on Friday.

In the Euro zone the highlight is the European central bank decision on interest rate at 12.45 Thursday just after the UK announcement.

I’m off to a Brazilian party on Saturday evening and Ikea tonight (to buy missing parts for my new wardrobe!) Is it me or do their wardrobes look far better in the showroom?

Have a great weekend and let’s hope sterling gets a kick up the “bum” next week.

Pounds to Euro = 1.1265

Women drivers hey?

Best Estonian Kroon exchange rate
Pounds to Estonian Kroon

Sterling halts losses against majors on UK government bank scheme

2009-02-27T11:11:00.005Z

Sterling halts losses against majors on UK government bank scheme
Euro down on dollar in run up to ECB interest rate decision next week
Dollar mixed as it digests President Obama’s budget report
Yen remains under pressure as month end flows intensify its losses
Rumours Asian central banks bought dollars to support home ccy’s

Pound:
Yesterday saw sterling manage to halt its losses against the greenback after earlier selling off midweek. A UK government scheme to protect banks against further losses from so called toxic assets helped generate a more positive tone in markets and underpin risk appetite.

The pound took back over three cents to trade at an intraday high of $1.4386, but then dropped as the markets digested the budget plan outlined by US President Obama in afternoon UK trade. Cable has continued to fall this morning and threatening to drop below the $1.42 level. Sterling also halted its demise against the euro in Thursday morning trade as the single currency itself remains under pressure from a possible interest rate cut next Thursday. We are seeing support levels around the 1.12 level with GBP/EUR trading sideways.

Euro:
The euro is finishing the week under pressure from a rallying dollar, with the single currency being sold off in anticipation of an interest rate cut by the ECB next week. EUR/USD has gone against the euro most of the week as investors bought the buck in a safe haven trading strategy.

As European markets opened this morning, the euro took another nose dive south with another half a cent lost for EUR/USD to trade at $1.2630. The euro's gains against the pound has lost its momentum as we close the week, with EUR/GBP trading sideway yesterday afternoon.

Investors will watch closely what affect the UK’s protection scheme for its banks will have on the pound, and how likely a rate cut by the ECB next Thursday will weaken the single currency.

Data 10.00: E/Zone CPI YoY expected 1.1% from 1.6% previous.

General:
• Yen makes back some losses as Japanese exporters sell the dollar and buy their home currencies to close books for month end.

• Some Asian central banks acted to prop up their sinking currencies as the US dollar surged on deepening worries about a steep economic downturn across Asia. The Korean won, Indian rupee, Malaysian ringgit, Indonesian rupiah and the Singapore and Taiwan dollars all lost out in the region-wide selloff that analysts said would likely continue in the weeks ahead.

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Best Currency rate for Swedish Krona (SEK)
Pounds to Swedish Krona

Sterling gives up gains on dollar and euro

2009-02-26T14:40:00.007Z

Dollar reassert’s its safe haven status as US homes sales data drops
Sterling gives up gains on dollar and euro
Single currency mixed against majors
Oil makes surprise gains on drop in US gasoline reserves
Former European central banker highlights threat to single currency

Pound:
Sterling was looking fairly stable against the dollar yesterday as UK markets opened, but then cable took a turn for the worst as the pound nose dived south. A similar story unfolded against the euro as sterling charts all painted the same picture. Continued scepticism about the UK governments ability to turn around the problems in the UK’s financial sector are likely to continue to weigh on the pound, with some seeing cable going back to its January lows near the mid $1.30’s.

Poor economic data in the US sent investors scurrying for the safe haven status of the greenback, which also had a negative effect for the pound’s position against its other rivals. Bank of England Monetary Policy Committee member Danny Blanchflower said yesterday that there are clear risks of a “protracted” recession in the UK and the threat of deflation must be taken into consideration.

Data released this morning showed UK house prices fell more than expected to a fresh record low in annual terms in February and the recession means its too early to say whether they have bottomed out yet, the Nationwide Building Society said. Prices were 17.6% lower than they were in February last year.

The RBoS has announced the largest annual loss in UK corporate history this morning.

Euro:
The euro fell to session lows against the dollar yesterday after the release of weak US housing data. The single currency was pushed down to $1.2660 as investors rushed to the safe haven status of the buck. The euro has recovered slightly this morning with just over half a cent gain to trade at $1.2730. The euro's gains over the pound have continued as we saw a rally of just under 2%, pushing EUR/GBP to 0.8980 in early morning UK trade. This was helped by the continuing threat over the UK governments ability to stabilize the UK economy. Weak housing data from the UK this morning has also helped the euro continue its recent march on sterling. German market research group Gfk’s forward looking consumer climate index rose to 2.6 points for March, defying expectations of a decline, also giving support to the euro.

Data 09.00: German Retail PMI & E/Zone Retail PMI. 10.00: E/Zone Economic Confidence.

General:
• One of Europe’s most respected former central bankers ‘Karl Otto Pohl’ has told Sky News there is a serious threat to the survival of the single currency. He said countries such as Ireland and Greece are in danger of defaulting on their obligations to the eurozone. He admitted the euro was under intense pressure and heavily indebted countries could be forced out of the single currency.

• Oil prices are up slightly to $42.73/barrel after a surprise drop in US gasoline reserves was posted.

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Best Currency rate for Slovakian Krona (SKK)
Euros to Slovakian Krona

sterling crashes against US Dollar

2009-02-25T18:59:00.002Z

Hello and good evening.
What can I say about last night’s fleetfoxes gig, wow! They were absolutely amazing and the roundhouse proved again (after I saw Oasis last year) what an incredible venue it is.

Moving on to the currency markets, we have seen a big move down for sterling against the Euro and even more against the stronger US Dollar. The pound has shed 1.5% from a level of 1.1336 at 8am this morning to its current level of 1.1168 and over 2.5% against the USD (1.4608 to 1.4220).

Today has seen some serious price action with the pound against the USD and I am sorry to say it hasn’t been in sterling’s favour!

The highlight of the day for the UK was our GDP that came in at unrevised figure of -1.5% rather than the lower forecasted figure of -1.6%. However this was no aid for sterling and instead highlighted the sharpest drop since 1980 and (what we already knew) that Britain has entered into a deep reality sorry recession, helping create a pound sell off. It now looks even more likely that the bank of England will reduce interest rate further from the current level of 1% and will start to buy assets with newly created money to try and boost demand.

In the US stocks gained in New York and Asia yesterday after investors heard Ben Bernanke (equivalent to Bank of England governor) finding some hope that the recession may come to an end sooner. However attention quickly flicked away from this news to Obama’s new stimulus plan and concerns over its effects on the banking system. The USD has therefore seen another round (I’m starting to lose count!) of buying over concerns as to when this mess will be cleared up and the US and world economy gets back on track. Some are now expecting things to continue beyond 2010 and according to Bernanke if the banking sector does not improve things won’t be getting better any time soon.

It is important to remember the strong correlation between stocks and the USD and when stocks are sold and move down the USD is purchased as a safer option to investors, strengthening the currency as shown today in comparison to yesterday.

Early tomorrow morning (7am) sees the release of UK house price data from Nationwide expected to show a drop of -1.2%. It feels as if the market has become immune to this data now but be aware of any poorer than expected news for the UK. We will also see manufacturing data (durable goods) and unemployment claims for the US at 1.30pm so depending on how weak this news is, the USD may strengthen further over concerns with US companies, job losses and more economic slowdown.

Expect further USD strength this week especially if financial markets continue to show vulnerability.

I’m going home now to watch my beloved West Ham beat Middlesbrough.
Thanks for reading.

Introducing Toby Fischer and Currency Today

Best Currency rate for Polish Zloty
Euro to Polish Zloty

Euro recovers against majors as risk appetite emerges.

2009-02-25T14:27:00.003Z

Dollar rally yesterday cools as Bernanke eases investors fears
Euro recovers against majors as risk appetite emerges
Sterling makes back gains on dollar
Yen continues to weaken -Japans trade deficit widens to record level
Gold sees large sell off from Mondays high of $1,000 to hit $961.85

Pound:
Sterling was at the mercy of the greenbacks moves yesterday as risk sentiment flowed one way then another in a choppy days trading. We saw the pound take a nose dive against the dollar as economic data from the US made investors run for the safety of the buck, but then we saw a reversal in risk sentiment as the Fed Chairman addressed the Senate and eased investors fears about bank nationalization. This saw a flow of funds out of the dollar and into more riskier investments as the dollars gains were soon given up.

The pound recovered its losses of over one and a half cents made in yesterdays afternoon trade to be trading just under $1.46 this morning. The pounds position against the euro has taken a set back with the euro benefitting from a weakening dollar, and fears easing slightly over the single currencies exposure to troubled eastern European Banks.

Data 09.30:GDP QoQ(4QP), Private Consumption & Gross Fixed Capital Formation.

Euro:
An initial move against the euro and into the dollar was reversed late yesterday afternoon as a rise in risk appetite helped the euro recover from a sell off against the greenback. The single currency took back the cent lost earlier to trade at an intraday high of $1.2876 as stocks rallied and investors showed an increased interest in risk. Funds flowed out of the dollar and into the single currency. Fears over the eurozone and its exposure to Eastern and Central European economies, which sent the euro to multi-week lows last week, have subsided somewhat as well. The euro also saw gains against the pound as the single currency took back over 1.6% from sterling to hit 0.8882. The euro’s recovery will be watched closely by investors, as these volatile markets are moving currencies one way then another, faster and in greater value than in ‘normal’ times.

No data.

General:
• The yen has now dropped over the 141.00 level against sterling as Japan’s trade deficit widened to its biggest level on record in January, as a global economic downturn sapped overseas demand for Japanese goods and caused exports to plunge 45.7%, the fastest decline ever.

• Gold has fallen down to $961.85 from its dizzy heights of over $1,000.00 at the start of the week. Traders said the near term focus may be on results from UK bank RBS due tomorrow, with worse than expected results likely to fan risk aversion and boost gold.

Pound exchange rate to Euro = 1.1326

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Best Currency rate for Icelandic Krona (HUF)
Euro to Icelandic Krona

Sterling drops against the Euro

2009-02-24T19:09:00.003Z

Hello and good evening to you all.

I thought before I leave the office tonight on my voyage to Chalk Farm on the Northern line and the roundhouse (to see the fleetfoxes www.myspace.com/fleetfoxes) I should write a quick round up on sterling against the Euro.

Unfortunately we have seen a significant move down from the 1.1450 high in the early hours of this morning, trading into the 1.13 range before hitting its current level of 1.1263.

Despite CBI realized sales (survey on UK wholesalers and retailers sales numbers) being weak but better than last month we can’t run away from the fact that jobs in this sector are being lost at an alarming rate with only lower interest rates and falling inflation providing “a” chance of a pickup. However if people are not earning they can’t spend! Mortgage approvals (mortgages approved in the UK) rose slightly last month but forecasts remain weak as lending remains tight.

We have seen a more dramatic drop in the rate this afternoon as Ben Bernanke (US equivalent of bank of England governor) helped see more safe haven buying of the USD over slow down concerns resulting in a selloff in sterling and a lower rate against the Euro and USD.

Tomorrow sees the revised GDP (growth) figure for the UK concerning the last quarter of 2008, this is expected to be low at -1.6% so any number lower than this will hurt sterling. We also have Blanchflower (MPC member at the Bank of England) speaking tomorrow at 5.30pm, he is a big “dove” in the camp (in favour of reducing interest rates) so his speech could be an interesting insight into any further interest rates in the UK on the horizon.

I am still expecting the pound to trade higher end of the 1.10-1.15 range in the next few days, with another move into 1.1400 expected in the next week. My clients are continuing to benefit from “limit orders” on buying Euros where you can specify a higher rate than is currently available and track the market 24 /7. This method allows you to lock in a higher rate even if it hits the desired level at 3am in the morning (whilst I’m tucked up in bed). The opportunity to automatically buy is available and great for times of high volatility.

This currency tool was utilised only last week by one of my clients, please see his comments below.

“Just a note to say thank you for filling the order on the euro. As you are aware I am an avid exchange watcher and in common with others always think that we can buy at the low end. However there was obviously only a small window of opportunity and I am delighted that the order was filled by you right on the price.- and no additional cost !” Mr Houston. Feel free to post a reply to this blog, email or call me if you require further information.

On a separate note whilst news over our success at the Operas is still circulating take a look at this video taken in an 1970’s Oscar ceremony when Charlie Chaplin received any Honorary Oscar . Listen to the words in the first minute – what a legend!

http://www.youtube.com/watch?v=J3Pl-qvA1X8

Introducing Toby Fischer and Currency Today

Best Currency rate for Hungarian Forint (HUF)
Euro to Hungarian Forint

Sterling takes advantage of under fire euro to see modest gains.

2009-02-24T10:33:00.003Z

Euro falls as Trichet sounds alarm over E/Zones financial system
Dollar continues to gain against majors on flight to safety
Sterling takes advantage of under fire euro to see modest gains
US Stock markets tumble to twelve year lows to benefit the dollar
Swiss franc down—G20 summit addresses tax haven countries

Pound:
Sterling enjoyed its free ride up against the euro yesterday after initially ending last week on a downward trend. Just after 10.30 Monday morning, ECB President spoke regarding the state of the eurozone’s financial system and highlighted the pressures it was under. This saw investors sell the single currency, pushing sterling to a two week high of 1.1454. There is also a view that the ECB may be leaning towards cutting interest rates in March to below 2%, which also added to the pounds gains over the euro.

The pounds gains against the dollar were even more of a surprise, as the safe haven status of the greenback has seen it gain against most other currencies.

It seems news that RBoS may be looking to place about 25% of assets into a non-core unit to prepare for disposal led financial companies to perform well on equity markets, helped the pound.

Data at 09.30: Total Business Investment & BBA Loans for House Purchase.

Euro:
The euro was already under pressure from the dollar’s safe haven status yesterday, but fell even more against the greenback when ECB President Jean Claude-Trichet spoke just after 10.00 regarding the state of the eurozone economy. The single currency gave up a whopping three and a half cents to the dollar as investors, already jumping into the greenback on a safety influenced move, heard Trichet send warning’s Monday morning that the eurozones financial system is living through challenging times, as financial markets and the real economy are dragged in a downward spiral. This also saw the euro lose value against the pound as the single currency lost 2% to trade at an intraday low of 0.8740.

Mr Trichet said the bank was disturbed by signs of a fully fledged credit crunch as banks shut off lending to healthy borrowers. Credit has contracted in absolute terms for the first time in recent weeks. Mr Trichet’s warning is a clear sign that the ECB will cut interest rates below 2% at its next meeting in March. It has stood aloof in recent weeks as central banks worldwide tore up rulebooks and explored extreme measures.

Data at 09.00: German Ifo, E/Zone Current Account. 10.00: E/Zone Industrial New Orders.

General:
• The Swiss franc could come under pressure as the G20 addressed the issue of tax havens, stating an intent to “devise sanctions to safeguard ourselves better against dangers emanating from uncooperative jurisdictions, including tax havens.

Pound to Euro = 1.1380

Introducing Toby Fischer and Currency Today

Best Currency rate for Danish Kroner (DKK)
Euro to Danish Kronar

Sterling see’s mixed start to the week-Up on dollar but down on euro.

2009-02-23T10:53:00.003Z

Dollar sold off against majors on US banking worries
Concerns US banks may come under greater government control
Sterling see’s mixed start to the week-Up on dollar but down on euro
Euro makes gains against it major rivals
Gold of $4 at $989.20 but did trade at $1006.50 per troy ounce Friday

Pound:
The pound took a back seat in the currency markets late Friday and this morning as the dollars move downwards saw cable take over three and a half cents off the greenback. The ongoing story regarding the US governments potential nationalisation of Citigroup and Bank of America is taking the headlines, and weakening the buck’s position against its major rivals. The pound did see falls against the euro, as an oversold single currency made a slight recovery from last weeks selling. The pound lost over 1% to the euro to trade at 1.1209 in this mornings trade.

This week will be a testing time for the pound as new figures may show the UK economy in worse shape than feared. The data may show the economy may have contracted even more sharply than first feared in the final three months of 2008. Economists said weak industrial production data is likely to trigger a downward revision to the initial estimate by the office of National Statistics that gross domestic product fell by 1.5% in the 4th quarter of 2008.

Euro:
The euro rose to multi week highs against the dollar and yen in Asia this morning after a wall Street Journal report fuelled players concern that the US banks may come under greater government control. In the wake of the report, the single currency jumped to $1.2950, a rise of more than 100 points to its highest level since Feb 11. The euro's position against the pound was helped by this EURO/US DOLLAR move as the single currency took over 1% back from sterling to trade at 0.8921 in early trade this morning.

Data expected in the UK this week also may be having a positive effect on the euro's position against the pound as figures are expected to show the UK economy is in worse shape than feared. This is not all going to go the euro's way however. Due to a concern over the European Central Bank’s near term rate cut, the euro had been sold of a bit to much recently and players adjustments of their euro holdings might have magnified the euro's climb. Therefore, some dealers said the euro's strength may be brief.

Data at 09.00: Italian CPI.

General:•
Gold’s rally last week saw it trade over $1000.00 per troy ounce but has come off $5 to trade at $989.20 this morning.

• Oil prices are lower at $39.97/barrel despite OPEC’s forecast of additional output cuts by the cartel.

Pounds to Euros = 1.1269

Introducing Toby Fischer and Currency Today

Best Currency rate for Czech Republic (CZK) today:
Euro to Czech Koruna

Sterling runs out of steam as investors are spooked by weak US data.

2009-02-20T10:45:00.003Z

Risk aversion steps in once again—dollar rebounds against rival ccy’s
Sterling runs out of steam as investors are spooked by weak US data
Euro sees initial rally against dollar but then falls flat
Yen sees small fight back on majors but expected to weaken further
Dow Jones brakes to new six-year low to hit 7552.29

Pound:
Volatility remained in the currency markets yesterday and sent a body shock through the pound. Just as the pound was ticking along nicely this week, making modest gains against the euro and dollar, bang, along came dire US data showing the extent of how bad this recession is getting with high unemployment and business expectations falling.

We saw cable fall by two cents and has continued falling this morning to$1.4165, wiping out any gains made this week. This dollar move also had a knock on effect for the pounds value against the euro as we saw nearly one and a half cent lost to trade at 1.1250. The pounds move downwards against the single currency was also helped by a possible move by Germany to support its weaker counterparts in Europe as they come under pressure from their exposure in eastern European banks.

Data at 09.30: Retail Sales MoM expected 0.1% from 1.6%, YoY expected 2.4% from 4.0%.

Euro:
Yesterday saw the euro take back losses made against the pound earlier in the week, which was down to a combination of expectations for a German initiative to help support weaker countries in Europe and a dollar move against the pound, which helped push EUR/GBP in the single currencies favour. The morning session did see EUR/GBP at a one and a half week low, but the euro managed to take back 1.2% to trade at 0.8882 this morning. This expected initiative is however, not expected to last long and may disappoint the sellers of euro's.

The single currency did start to drift off the dollar in yesterdays afternoon session as US data spooked markets into retreating back into the safety zone which currently is the dollar. We saw over one and a half cents lost against the buck as EUR/USD dropped down to $1.2585.

Data at 10.00: E/Zone PMI manufacturing expected 35.0 from 34.4, German PMI Manufacturing expected 32.6 from 32.0.

General: The yen recovered against the dollar, pound and euro in Asian trade today on repatriation by Japanese exporters, but traders expect worries over Japan’s escalating recession will send the nation’s currency lower in the day’s ahead. Gold is still being pushed higher as risk aversion remains in play. We are now seeing levels around $972.90.

Pound to Euro = 1.1298

Introducing Toby Fischer and Currency Today

Sterling sees modest gains against dollar and euro.

2009-02-19T17:17:00.003Z

Sterling sees modest gains against dollar and euro
BoE minutes show unanimous decision to cut interest rates
Dollar weakens on US governments growing debt concern
Euro under pressure economy and Eastern Banks worries remain
BoJ leaves interest rates unchanged but yen falls against majors

Pound:
Sterling made modest gains across the board yesterday despite the release of minutes from the Bank of England showing a unanimous vote to cut interest rates earlier this month. The pounds continued rise against the euro has also been helped by the ongoing story of the problems with Eastern European debt and the E/Zone banking exposure to this. Concerns over the state of the E/Zone economy have also weakened the single currency against the pound, as we saw a one and a half week high for the pound on the euro of 1.1396 this morning. Cable has also seen a rally as worries over the mounting debt of the US government have now entered the equation. The risk aversion scenario will still be around, but it will be held up every now and then as investors continue to worry over the ever growing concerns over how much debt the US President is getting the economy into. Cable has now gained nearly three cents over the last 24 hours to hit an intraday high of $1.4393.

Data at 09.30: Public Finances & Public Sector Net Borrowing.

Euro:
The euro has continued to remain under pressure this week and we have now seen further falls against the pound to trade at a one and a half week low of 0.8781. Yesterday did see a small fight back against the dollar after short term focus players sold the greenback against the common currency to adjust positions on the back of rising concerns over US debt. The euro gained against the greenback due also in part to bargain shopping after making a near three month low of $1.2513 Wednesday. The falls in the euro over the last week or so have really been down to concerns about the euro-zone economy and the fragility of Eastern European banks. Western European banks have a big presence in Central and eastern Europe, where Moody’s ratings Service on Tuesday forecast a longer deeper recession than elsewhere to due the regions sizable fiscal deficits.

General:
• The BoJ held its policy interest rate steady at 0.1% as the yen lost ground against the majors.
• The Polish Zloty’s weakness has prompted members of the central bank to say rate cuts were unlikely this month, as the currency hit a one and a half year low against the pound of 5.5610.
• Hungary’s prime minister said the government and central bank would jointly investigate unconventional methods to support the under pressured currency.

Introducing Toby Fischer and Currency Today

Euro under pressure growing concerns for its major European Banks.

2009-02-18T15:02:00.002Z

Dollar continues its rally against major rivals
Euro under pressure - growing concerns for its major European Banks
Pound holds firm despite talk that S&P could lower UK credit rating
Yen remains under pressure as buying of yen eases
Gold continues its rally to trade at $966.80

Pound:
The pound took full advantage of an under pressure euro yesterday as sterling rallied to trade over 1.12 yesterday, taking nearly two cents of the single currency. The news of worsening economic factors spreading across Eastern Europe have dented peoples confidence in the euro, as a large amount of Western European banks have exposure in the under pressure eastern states. Even though the UK in not immune from such global worries, the view seems to be the pound has factored in a lot of negative views from investors but the euro may have not.

The pound managed to hold onto its own against the dollar yesterday, despite the rush to safety which has buoyed the greenback. Cable traded sideways yesterday in between $1.42—$1.43.

Yesterday’s trading for the pound was fairly positive but under pressure this morning as S & P are talking about potentially down grading Britain’s credit rating as a result of the governments latest bank bailout, potentially jeopardising any economic recovery. A downgrade would be calamitous for the country, which is on course to borrow an extra £500bn over five years. Should the UK lose its AAA rating or even be put on “negative watch”, the country’s interest bill would soar, putting further strain on the economy.

Data at 09.30: Bank of England Minutes

Euro:
Yesterday saw the euro come under pressure from all sides as the single currency dropped against its major currency rivals. The recent turmoil was prompted by a report from Moody’s, the credit agency which warned that west European banks with eastern subsidiaries were at risk of downgrades. The euro fell 1.5% to a two month low against the dollar, sinking below $1.26 for the first time since December, and also dropped sharply against the pound. Some market analysts warned of a regional economic collapse on the scale of the Asian crises in the late 1990’s. Several Eastern European countries have been hit by the rapid withdrawal of foreign capital and have struggled to fund yawning current account deficits and prevent runs on their banking
systems.

Data at 10.00: E/Zone Construction Output.

General:
Eastern European currencies continue to be under pressure. The Polish Zloty has now fallen to a one and a half year low against the pound standing at 5.48 and five year low against the euro at 4.88. Gold continued its safe haven march yesterday but is off its high this morning, trading at $966.80.

GB Pound to Euro = 1.1230

Introducing Toby Fischer and Currency Today

Sterling sees losses posted as banking sector takes toll on the pound

2009-02-17T11:22:00.006Z

Risk aversion rules as investors take shelter in the greenback
Sterling sees losses posted as banking sector takes toll on the pound
Yen weighed down heavily - losses posted across the board
Eastern European currencies crumble as fears of debt crises grows
Gold rallies by $12.10 to hit seven month high of $954.60/troy

Pound:
Sterling was a major loser yesterday, falling by more than two cents against the dollar at one stage as banks once again became a focus of investor concern. UK’s Lloyd’s Banking Group was still denying it would become nationalized as its HBOS arm posted massive debts.

The Bank of England’s Deputy Governor ‘Charlie Bean’ warned yesterday that the recession could be even worse than it suggested less than a week ago. He also pointed out that the fall in the value of sterling was necessary to rebalance the economy.

The pound has held its ground against the euro as the single currency has come into focus a lot more over the last few weeks, with investors noting the trouble that faces the euro, with its exposure to Eastern European states. Sterling’s position against the yen has recovered slightly, as the yen comes under pressure as its own economy has shown signs of weakness over the last few days.

Data at 09.30: CPI YoY expected 2.7% from 3.1%, Core CPI expected 0.9% from 1.1%.

Euro:
The euro fell sharply against the dollar and yen yesterday on growing jitters about the health of the European economy, and its banks in particular. The single currency held its own against the pound and traded in tight ranges. The euro's drop on the dollar and yen was fuelled by a report from Moody’s Investor Service discussing its concerns about the support of Western European Bank’s for their Eastern European subsidiaries, amid a deteriorating global economic environment. It names countries like Hungary, Croatia, Romania and Bulgaria as being at risk, adding Ukraine, Kazakhstan and Russia are under pressure even though their public sectors have relatively little external debt. It noted their main counterparties were banks in Austria, Italy, France, Belgium, Germany and Sweden. That fanned concerns about the European banking sector.

The euro plunged by more than a cent to $1.2650 and over a third of a yen to Y116.99. EUR/GBP traded in between 0.9009 and 0.8962. Market concerns over possible default by Ireland also hurt the euro, boosting demand for safe-haven German bunds. Attention today turns to Germany's ZEW business expectations survey.

Data at10.00: E/Zone ZEW expected –27.5 from –30.8, German ZEW expected –25.5 from –31, E/ZoneTrade Balance expected –6.5B from –7.0B.

General: The yen fell to a five week low against the dollar yesterday after Japanese Finance Minister Shoichi Nakagawa said he would resign once the Lower House of Parliament passes the fiscal 2009 budgetand related bills. Nakagawa said he was stepping down because of his embarrassing performance at the weekend’s Rome Group of Seven meeting—where his speech was slurred and his demeanour drowsy—and for health reasons. His sudden announcement took many Asian investors by surprise, and led to knee-jerk yen selling.

Pound V Euro = 1.1293

Introducing Toby Fischer and Currency Today

UK’s CBI sees 2009 GDP –3.3% YoY—Largest fall since 1949

2009-02-16T12:41:00.004Z

Sterling weakens across the board
UK’s CBI sees 2009 GDP –3.3% YoY—Largest fall since 1949
Dollar makes back losses from Friday as risk sentiment evaporates
Euro under pressureFriday saw E/Zone plunge deeper into recession
Sentiment in London dampens on back of big losses in Lloyds Bank

Pound: Friday saw cable rally on the back of the stimulus package in the US which Barak Obama is expected to sign. The pound took advantage of a rise in the favour of more riskier bets, but this soon evaporated and the pound has now dropped down against both the dollar, euro and most of its major rivals.

News of big losses at Lloyds Banking Group, a report by the CBI saying the UK economy will contract at its fastest pace for six decades this year and Rightmove data this morning showing house prices fell YoY at a record pace have dragged sterling downwards. Cable gains of just over two cents to $1.46 was wiped out as we have seen GB Pounds/US Dollar trade at $1.4215 this morning. GBP/EURO also saw a dramatic loss as nearly two cents has been wiped out to trade at 1.1150 this morning.

Lloyds HBOS- Competition laws suspended allow illegal merger.

Euro:
The euros weakness against the dollar in early trade Monday followed Q4 data from the euro-zone on Friday showed the region suffered its sharpest contraction in GDP since records began in 1995. The single currency has lost over two cents on the greenback to trade at $1.2750. Although the euro did rally against the dollar on Friday, risk appetite will remain in focus for the currency markets, despite the new US stimulus package giving the potential to inject some optimism into markets.

The euro has rallied against the pound this morning as the single currency took advantage of a sell off for sterling, due to bad economic data coming from the UK. The euro took 1.8% off the pound since Friday to trade at 0.8984. On this week’s agenda, the German ZEW business expectations survey for February is forecast to improve further, despite Friday’s dismal fourth quarter GDP data. The survey may improve slightly on the back of expectations of further rate cuts by the ECB and the impact of the government’s fiscal stimulus.

General:
• Japan’s economy shrank at its fastest pace in over three decades in the final quarter of 2008, as the global financial storm and languishing overseas demand dealt a stunning blow to the export driven economy. The yen has recovered Monday as non-Japanese players bought the unit betting that the worsening Japanese economy would prompt Japanese companies to sell overseas assets to cover losses back home.

• Spot gold is down $4.10 per troy ounce at $937.50. Oil is trading at $37.46 per barrel.

GB Pound / Euro = 1.1150

Introducing Toby Fischer and Currency Today

Mortgages drop to lowest rate since 1974.

2009-02-13T12:22:00.010Z

Headline news:

Mortgages drop to lowest rate since 1974
German economic growth slumps
France set to increase regulation for hedge funds
BOE issues further details on how APF will operate

Pound:
Sterling has been regaining some of it’s losses against the Euro and US Dollar this morning moving up to 1.1250 and 1.4550 respectively as the market digests the bad news delivered by Mervyn King on Wednesday.

"The Bank of England appears to be not only prepared for sterling weakness, but to welcome a decline in the exchange rate,"

said Ian Stannard, the bank's senior currency strategist in London. Stannard pointed to the discussion King held with reporters over the need to rebalance the economy away from domestic demand towards exports.

Sterling has also suffered from events abroad and it’s exposure to the US downturn. Financial stocks, which have been a key element driving the City-sensitive pound lower all year, are only likely to fall further as fears of further restructuring continue to haunt international markets. Also, risk aversion, which provides another pressure has helped, strengthened the US Dollar against the GB pound as investors flee to the safe haven.

German GDP released early this morning came in worse than expected at 2.1% against 1.8% forecast helping to push the pound back up against the Euro.

Euro:
German economic growth slumped in the fourth quarter of 2008, posting its sharpest quarterly fall since1987, as machinery investment and exports nose dived, data from the Federal Statistics Office showed this morning. Real gross domestic product declined 2.1% from the third quarter, when adjusted for seasonal and calendar effects, well below economists' forecasts of a 1.8% quarterly fall. This was the third quarter in a row that German GDP declined. GDP fell by 0.5% in the second and third quarters of 2008 respectively from the quarter earlier period. The data adds pressure on the European Central Bank to further cut interest rates in the 16 nation euro zone.

The euro zone's largest economy is widely expected to contract 2%-3% this year, which would mark the steepest decline since World War II.

Data: Eurozone Gross Domestic Product due at 10:00 AM

General:
• EU finance ministers to attack Alistair Darling over sterling's slide
• ECB Trichet: 2009 To Be Difficult

Pound Euro rate today = 1.1300

Boom bust n bankers:

Sterling rallies despite interest rate cut in the UK

2009-02-05T12:42:00.002Z

The BoE have reduced interest rate to 1% this morning by 0.5% from 1.5%. The ECB (European Central Bank) are making their announcement on interest rates at 12.45pm and are not expected to cut interest rates from the current level of 2%. If there is unexpected cut in rates the Euro is likely to weaken moving the rate further up. What will also be interesting is the ECB press conference where the president (John Claude Trichet) may provide clues on any interest rate cuts planned in the coming months.

Other key points to consider before taking the plunge are next Thursday’s BoE inflation report delivered by Mervyn King. Depending on the UK inflation number this should provide information on whether the bank is likely to cut rates even further from their historical lows. Expect massive volatility on this day and I personally feel this will be a big turning point for the pound especially if we see clues to an end in interest rate cuts.

The BoE is obviously keen to get the cuts out of the way (shown today) allowing the market to finally find an end in sight!

I am targeting above 1.15 for sterling Euro rate by the end of next week and 1.50 against the USD.

If you still can’t make your mind up how about taking advantage of the snow (if there is any left in your area) I certainly did by reusing my charity gorilla suit on Monday evening.

See my on video here:

http://www.currencytoday.co.uk/videos/sledging.php

(hehehehehe)

Thanks for reading

Pounds to Euro = 1.1362
Euro to Pounds = 0.8801

Sterling winning against the Euro today.

2009-01-29T18:47:00.002Z

Unlike my work football team (unfortunately we lost 6-1) the pound has beaten the Euro today allowing the rate to move up above 1.10 for the first time since 20th January.

Euro zone economic sentiment hit record lows (=since records began in 1985) this month and to put more pressure on interest rate cuts in the Euro-zone inflation expectations fell as the recession filters through.

What we need
Today’s news on expectations for further ECB interest rate cuts is what we need, and even speculation on it’s own has made the pound more favorable against the Euro. One of the main reasons for the pound’s weakness against the Euro is down to our interest rates being lower at 1.5% against their 2%. If this gap is narrowed (or even the speculation that their rates will be cut along with ours) this at least prevents any further widening of the interest rate differential and restricts the Euros advantage over the pound.

UK rates
The Bank of England must ease monetary policy quickly, but that doesn't mean its key interest rate should fall to zero, the Monetary Policy Committee's most dovish member David Blanchflower said today. He also said that the MPC has alternatives to cutting its key interest rate, which now stands at 1.5%, the lowest level since the central bank was founded in 1694. "There are policy measures we can take to address these problems, without necessarily cutting Bank rate to zero," Blanchflower said. "When money markets are dysfunctional, asset purchases by a central bank can help to reduce liquidity premia and restore activity and lending. I would label these type of actions as 'credit easing'."

Click on the link below for more interesting facts on interest rates and an explanation of the term “Quantitative easing”

http://www.guardian.co.uk/business/audio/2009/jan/29/creditcrunch-bankofenglandgovernor

This demonstrates alternatives available to monetary policy (of continuing to cut interest rates) and would support the pound more as each further interest rate cut hurts sterling. Expectations still remain for a cut to 1% next Thursday.

For any Euro buyers now looks like a great time to fix a rate for at least some of your requirements in this volatile market. One great strategy if you are unsure is to buy 50% of your requirement to limit your exposure.

If you have any spare time this weekend watch the film below (it’s hilarious)

How to make a transaction with Currency Today

How to buy Euros - who will handle my funds

How do I open an account with Currency today

What exchange rate will you offer me and when to book a rate

Who are Currency Today and Will I get the rate displayed on your home page.

Is my money safe - Are there any extra charges?

Can I buy if the rate moves up

How long does it take to open an account and how do I get my money to you?

How many years has Currency Today been established?

Why use Currency Today rather than the bank - Is there a minimum amount?

Can I buy holiday money?

How does it work if I am selling currency

Introducing Toby Fischer and Currency Today

Sterling hangs onto gains despite IMF’s prediction UK will suffer most.

2009-01-29T11:47:00.002Z

Pound:
Considering the news that came out from the UK and IMF yesterday, sterling weathered the storm well. The pound managed to take gains on the dollar before the Fed decision later in the day to trade at a one and a half week high of $1.4375, before falling back slightly to $1.4140.

The pounds position against the euro has also held up well, with surprising gains made overnight and this morning to take the currency pair to1.0825. This flies in the face of the damming report released by the IMF yesterday which said Britain is facing the deepest recession of any big industrialised economy and that the UK economy would shrink by 2.8% this year. This hasn’t looked good for the UK Prime Minister, Gordon Brown and Chancellor, Alistair Darling, who have both commented that Britain is in a good position to ride out the global recession.

Funny Gordon Brown video found on Youtube:

The usual damming UK housing data was also released yesterday, with the pound also taking it in its stride. UK housing prices posted their biggest annual drop on record in January and are unlikely to stabilize until mortgage approval recover, the Nationwide Building Society said.

Euro:
The euro is remaining under pressure today after the Fed’s move Wednesday, but dealers are questioning whether the dollars hold on the euro can sustain its momentum. For now the euro is seen in a range of ground $1.3100 to $1.3300. The single currency is also down on the pound, despite the news that the IMF has put the UK as the economy to come out of this recession last, and to shrink the most. Whether this is asign that the markets feel the worst news has been aired for the pound, as oppose to the single currency will remain to be seen. EUR/GBP fell from 0.9343 to 0.9207. The single currency seems to have been dragged down by the dollar move, which has had a knock on effect for the single currencies position against its other major rivals.

Data at 10.00: E/Zone Economic Confidence expected 65.0 from 67.1, Consumer Confidence expected –31 from –30, Business Climate Indicator expected 3.50 from –3.17.

General:
• The yen regained some ground in Asia this morning as Japanese exporters bought the unit for monthendsettlements. Asian investors also helped prop up the yen, regarding its weakness early in the sessionat more than one week lows against the euro and dollar as a good buying opportunity.

• The New Zealand dollar fell against the pound, yen and US dollar after New Zealand’s central bankslashed its official cash rate by 150 basis points to a record low 3.5% to help the faltering economy.

Pounds to Euros = 1.0814
Pound - Canadian Dollar rate = 1.7260
Euro to Dollar = 1.3065
Gb Pound to Dollar = 1.4129

Introducing Toby Fischer and Currency Today

Sterling climbs back up against the Euro.

2009-01-28T16:26:00.002Z

Today has seen some nice price action in the currency markets seeing sterling rally against the Euro for a second day and well away from the 1.0504 low on Monday 26th Jan to it’s current level of 1.0800.

Our currency has benefitted from a rebound in investor risk appetite with investors prepared to take more risk on the financial markets, buying some sterling denominated investments.

Car loans
Plans announced here to help the auto industry by pumping in billions of pounds worth of loans are seen as a way of softening the recession we are now in and may well prevent us from reaching zero interest rates. Good news for my mate working at Volkswagen needing to sell a few more Golf’s!

Initial concerns over one of our biggest bank’s Barclays were also helped with promising earnings expectations, making our economic health look stronger. Sterling’s fall started with Northern Rock in autumn 07 highlighting our exposure to any problems in the banking and financial services sector.

With economic conditions looking more positive for the UK today, expect sterling to continue a rally against the Euro towards 1.09+ over the next few days.

Tonight sees me play 5 a side football for the fifth week with my work colleagues, with four losses and one draw things can only get better.

Some comedy Football - Bloopers

Thanks for reading

Introducing Toby Fischer and Currency Today

Sterling sees gains on dollar—risk sentiment creeps back into markets.

2009-01-27T12:01:00.002Z

The pound gained against its major currency rivals yesterday, touching a week high on the dollar and yen, and pushing through 1.07 against the euro. In Asian trade we saw Japanese investors covering sterling short positions on good news from UK bank Barclays PLC. The bank said that it has $49bn of committed equity capital and isn’t seeking more capital injections.

Cable broke through $1.40 which was a five cent gain on the day, and has pushed through $1.41 this morning. Sterling touched a week high of Y126.21 against the Japanese currency, helped by Japanese covering of short selling of the pound. GBP/EUR saw a welcome break in the pounds favour, buts has dropped back slightly this morning from yesterdays intraday high of 1.0710 to1.0686. Despite this bounce on sterling strength, the pound may be hard pushed to sustain its gains in the near term, once the market’s focus returns to signals of further global economic deterioration. The bounce seems to be the upside of relatively good news after such a long string of bad news for the pound. In a tough market, bagging profits as you go along may not be a bad strategy.

Data at 11.00: CBI Distributive Trade

Euro:
The single currency lost ground yesterday against sterling, despite its rally against other currencies. A rise in risk appetite and bounce in equities couldn't stop sterling's small rally as the pound was buoyed by a FTSE rally and a fight back by UK bank stocks. EUR/GBP lost 2% yesterday, from a high of 0.9520 to hit an intraday low of 0.9339.

We saw a different story against the single currencies other rivals as the euro reversed the previous weeks losses against the dollar and yen yesterday, on a bounce in equities markets after the release of some positive US data, which encouraged traders to buy up riskier assets. The rally got underway after the euro broke the technical level of $1.3013 in early New York trade. Traders jumped onto thebandwagon and pushed EUR/USD to new highs.

The speculative market had been positioned for more dollar gains this week after the buck rallied last week, and the brief rise in risk appetite left it pulling those bets. Last week the euro declined to more than a six-week low of $1.2764.

Data at 9.00: German Ifo Expectations 77.5 from 76.8. E/Zone Current Account.

General
:• Spot gold added $1.65 to trade at $903.85 after starting out yesterdays open around $890.30.
• Japan’s benchmark Nikkei 225 Average was up more than 4.0%, following US and European sharemarkets closing higher overnight on better than expected US existing home sales data for December.

Euro Pound exchange rate today = 0.9370

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Sterling remains under pressure against majors.

2009-01-26T14:29:00.002Z

Pound:
The pound has had a torrid couple of weeks, and looking ahead, looks likely to renew its downturn in the coming weeks ahead as investors worldwide dump UK financial assets amid signs of a worsening economic and fiscal outlook.

A currency strategist at Westpac Banking Corp New York, Richard Franulovich said “Foreign investors are fleeing the UK and I think the selling momentum will continue,” Targets are seen on cable as low as $1.20 levels. Yesterday there was a report in the Sunday Times regarding arch dove member of the BoE Monetary Policy Committee ‘Danny Blanchflower’ saying UK interest rates should obviously head down to America's near-zero level. He also said in his interview, unemployment which now stands at 1.92m, would rise to 3m in a years time and could go higher.

This morning we have seen data from Hometrack reporting asking prices in the UK fell by 1.0% in January and by 9.4% on the year.

In the UK this week, data is expected to show that retail sales rebounded marginally in January due to further deeper discounting in the first month of the New Year. Despite the small pickup, the survey is forecast to remain close to the record low reported in December.

Euro:
The euro is down slightly on the dollar, but still looking strong against an under fire pound. The single currency is having its own problems however, as members of the 16 nation strong currency are being hit hard in the global financial storm, but the UK is still being seen as the currency to ditch, as EUR/GBP goes backthrough 0.95, hitting 0.9520 this morning.

The euro may have some small gains on the dollar this week, as the greenback will have to digest fourth quarter earnings as businesses report potential losses.

Looking ahead to this week, further falls are expected in Germany’s Ifo business climate indicator, although economists expect the fall to be less harp than recent months. Other confidence indictors are due in the week ahead, withthe E/Zone economic climate measure also forecast to slide in January and likely to suggest a weak economic performance in the early part of this year.

General:
• Gold is down $7.80 at $890.30 per troy ounce after its strong rally at the end of last week where it touched $903.80
• Oil prices are lower today following a report that the IMF will further lower its world economic growth forecast. Nymex fell to $45.83 per barrel.

GB Pound to Euro rate today = 1.0597

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Sterling still under pressure as CBI statistics show worst for decades.

2009-01-23T16:27:00.003Z

Pound:
As the week draws to a close, the pound looks like taking a sigh of relief, as it has the weekend to take stock after a turbulent and painful 4 days trading. Today looks like showing no mercy either, with GDP QoQ & YoY data and retails sales, all due at 09.30—with the GDP data to officially confirm, the UK is in recession.

The dire state of Britain's manufacturing sector was laid bare yesterday as car production slumped by nearly half and manufactures reported the bleakest outlook in 28 years. Some 56% of companies reported a fall in orders and only 14% reported a rise, pushing the overall measure of orders to its lowest level since the last recession in 1991.

Looking at what's happened to the pound which has suffered its worst ever fall in value, is dire reading. Measured against a basket of other currencies the best way in this globalised era to test a currency’s strength—the pound has fallen in the past year by around a quarter. This is more than any previous devaluation in the past century. What we can hope, is that the UK is laying bare its worst hand, so that hopefully, we may be close to a bottom. We have not seen such volatile times for the pound in quite some time, but looking at the eurozone, its is proving it is not immune either.

Data at 09.30: GDP QoQ expected at –1.3% from –0.6%, YoY expected at –1.5% from 0.3%, Retail Sales expected at –0.7% from 0.3%.

Euro:
The euro was range bound against the pound yesterday, trading between 0.9345 at a low and 0.9469 at a high. The single currency did fall against the dollar and yen in Asian trade Friday as investors sold the currency as part of their risk reduction due to a decline in Japanese stock prices and a gloomy view on the eurozone economies.

Against the dollar, the currency was quoted at $1.2937, compared with $1.3009. Traders say the euro will likely continue falling, heading for $1.27 in the near term.

A drop of nearly 3% in Japanese stocks prompted investors to sell the euro against the greenback and yen. After a series of bad news including (Standard and Poor’s) cutting its long term securities rating on Spain, Portugal and Greece, currency players have shifted their focus to the eurozone economies. They now speculate other nations ratings might be downgraded because the outlook for the European economies remains gloomy.

Data at 10.00: E/Zone PMI Composite.

General:
• The Obama administration believes China is manipulating the value of its currency, despite his backing of a strong dollar policy.
• Oil prices are lower at $42.90 per barrel and gold is down $3.20 at $853.20 per troy ounce.

Pounds to Euros = 1.0691
Pound - Canadian Dollar rate = 1.7023
Euro to Dollar = 1.2822
Gb Pound to Dollar = 1.3708

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UK economy fears spark plunge in sterling.

2009-01-22T12:33:00.004Z

Pound:
The pound fell to its lowest level against the dollar in more than 23 years, but regained its footing late in the day to eke out a modest gain. The pound has come under intense selling pressure since Monday down 12.7% from Monday’s intraday high after the UK government introduced a bailout package that investors have little hope will save its banks or the economy. That pressure increased yesterday after the expiration of yen currency options that had knockoff effects on several currencies.

A report from Reuters has said that the pound’s devaluation will be discussed at the up and coming Group of Seven meeting on Feb 14th in Rome. The source added that the overall situation in currency markets does not require verbal intervention at this point. The pound could extend its recovery from the lows touched Wednesday as markets discount the negative developments in Britain. It seems we may be getting close to a point where nearly all the bad news in priced in for Britain. “No one can say for sure that this is the end of the move, but its reasonable to suspect that just as the area around $2.00 was very toppish, the area in the mid-$1.30’s will tend to eventually start to help define the lows”, Mike Moran from Standard Chartered said.

Data at 09.30: UK CBI Industrial Trends Total Orders.

Euro:
The euro traded sideways yesterday against both the dollar and pound, but down against a continuing rally in the yen. The single currency did come under pressure early in the day as the German government said in its annual economic outlook report, that Germany will see its worst performance in six decades this year due to a slump in exports and capital investment. The Germany economy faces its biggest challenge since reunification, according to the report.

The single currency’s position against the pound is still looking positive as sterling comes under huge pressure of its own. There are fears the euro could be the next target currency to sell for investors. Some currency experts reckon that the single currency could be shot down as far as $1.20 against the dollar in coming weeks as the dire state of the eurozone hits home.

Data at 10.00: E/Zone Industrial New Orders MoM expected at –5.0% from –4.7%.

General: China’s economic slowdown deepened in the last quarter of 2008 with economic growth falling to an annual rate of 6.8% in the face of slumping exports and a weak housing market. Portugal became the third eurozone country this month to have its credit rating cut by Standard & Poors, as worries about ballooning fiscal burdens across the bloc pushed the premiums that some governments pay on their debt to new highs.

Pounds to Euros = 1.0567
Pound - Canadian Dollar rate = 1.7370
Euro to Dollar = 1.2982
Gb Pound to Dollar = 1.3777

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Pound tumbles of fears bank bailout will fall short

2009-01-21T16:35:00.003Z

Pound:
Sterling was the currency of choice yesterday, but not for investors to buy, but for economic writers to fill there pages with dire, gloomy predictions and facts about a tumbling pound and a UK economy which seems to be suffering the worst compared with the US and E/Zone in the eyes of the financial masses.

What a diffence 6 months can make to the UK economy:

The UK’s latest bank-rescue efforts seemed to have initially backfired, helping drive its currency to historic lows while aggravating fears about the stability of the country’s banks and the fate of the government’s finances. The pound slid nearly 5% on Tuesday against the yen and seven year low on the dollar.

This morning we have seen the pound continue its demise against the US Dollar as we have dipped below the $1.38 level. Against the euro, the pounds slide did initially come to a halt around 09.30am yesterday, as CPI data came in slightly better than expected, albeit still very low. This bounced the pound up against the majors, but normal service of dumping sterling has been resumed this morning. With prices for goods in the UK falling so fast, deflation will come into play which will be a worry for the UK government.

This morning we have key data in the form of unemployment numbers, which as widely publicised, are not expected to be pretty.
Update: UK unemployment hits 1.92 million

Data at 09.30: BoE Minutes, Jobless Claims change, Claimant Count Rate, ILO Unemployment Rate, Public Sector net Borrowing.

Euro:
The euro has bounced back slightly against the greenback this morning, after falling to a six week low against the dollar. Looking ahead, downward pressure on the euro could emerge as quickly as it disappeared this morning, with the possibility of more bad euro news.

The ZEW data from Germany and the E/Zone was mixed yesterday and had little market impact. The euro’s march on the pound was halted slightly yesterday morning as UK CPI data came in slightly better than expected, but normal service of ‘sell the pound’ has been resumed
and we have hit 0.9358 in this mornings trade. It seems analysts are worried about what could still emerge from the E/Zone with regards to more bad financial data, but the focus is still on the UK and sterling, so EUR/GBP is seen the be in the single currencies favour, but EUR/USD looks under increasing pressure.

Data at 09.00: Italian Trade Balance

General:
• Gold is up $6.30 per troy ounce to trade at $850.30 and rising as investors are struggling to find anywhere with decent returns as a result of global interest rates falling, and worrying fears about the global financial markets.

Pounds to Euro = 1.0676

Other rates:
Pound - Canadian Dollar rate = 1.7524
Euro to Dollar = 1.2866
Gb Pound to Dollar = 1.3735
Above currency rates supplied by Dollars Today.co.uk

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UK bank stocks tumble - Sterling falls in wake of bank sell off

2009-01-20T11:50:00.002Z

Pound:
The British pound plunged in Asia trade today, hitting an almost seven-year low against the dollar and fresh lifetime low against the yen and a two week low against the euro, as investors scrambled to cut exposure to a weakening UK economy and its distressed banking sector. With nobody wanting to buy the pound, we may see further declines if more bad data is posted in the UK. Cable is also under pressure as a rallying dollar is back in the market after a national holiday yesterday and a new president being sworn in office today. The pound has now lost over four cents against the dollar to hit a seven year low of $1.4119.

UK banks led the slide on the FTSE as the UK government announced the £200bn financial bailout which was the second time they have tried to prop up the UK economy. RBoS also warned that losses could reach £28bn which also helped to bring pressure on sterling. The pound has also fallen against the euro, despite the single currencies own banking problems and downgrading for Spain's credit ratings. GBP/EUR has now slipped back under 1.10 to hit a two week low of 1.0891.

Data at 09.30: CPI YoY 2.6% from 4.1% & Core CPI YoY 1.5% from 2.0%.

Best Gordon Brown Song:

Euro:
The euro continued to be under pressure from the dollar this morning as it posted a four cent drop to trade at $1.2930. This was a combination of slumping economic prospects, a credit rating drop from Standard and Poor’s Ratings Services for Spain, which went from AAA to AA+ and a slide in Irish banking shares. Irish banks lost half their value amid fears for the sector after the nationalisation of Anglo Irish last week and the announcement that Bank of Ireland’s chief executive was standing down. If we see credit ratings cut for other European countries, namely Italy and Greece, we may see more weakness for the under pressure euro.

The euros position against the pound was one of gains, as the UK digested its own banking crises and the second round of bailout plans by the UK government. EURO/GB POUND saw a gain of 2.5% to trade at a two week high of 0.9181 this morning.

Data at 10.00: German ZEW Survey –42.5 from –45.2 & E/Zone ZEW Survey.

General:
• Gold is down $5.80 at $830 per troy ounce, although it has pared some of its earlier losses on the weak euro.
• Oil is down $2.12 per barrel to trade at $34.39 as market is plagued by weak global demand.

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Sterling looses gains against majors after hitting week highs

2009-01-19T11:07:00.003Z

Pound: Sterling did see welcomed gains made against both the dollar and euro on Friday, after the dollar came under pressure from huge losses made in its banking sector, and the E/Zone saw weak economic data posted. Cable saw a rally of over two and a half cents as it took advantage of a sliding dollar, but has since had to swallow not only expected weak house price data, with prices falling for the seventh straight month, but also the announcement by the UK government that it is to issue yet another banking bailout plan. We are now seeing hundreds of billions of taxpayers money to bail out the banks again, as the government offers a massive package to guarantee lending and insure banks bad debts. Barclays may also have to accept government stakes to take part in the £200 bn scheme under which the taxpayer could foot a potentially unlimited bill for bad debts such as sub-prime lending in America. This has seen the pound plunge this morning as it shed two cents on the dollar to trade below $1.47 on the dollar, and a full cent dropped against the euro to hit 1.1052.

Where's my bail out?

This week is a bumper week for UK economic data, with first release of economic activity in the fourth quarter of 2008, which will be closely watched as it is expected to contract by the largest amount since the second quarter of 1980.

Euro:
The euro took advantage of a sell off in the dollar late Friday as it rallied over two cents to hit $1.3378. This was despite data released Friday showing the E/Zones trade balance swung back into deficit in November from a surprise surplus the previous month. Analysts were only expecting a deficit of €3.5bn but were taken off guard when the figure came in at €7.0bn. This saw the single currency post over a cent drop against the pound as it hit a week low of 0.8847. This has now been reversed as the pound has taken a battering in early morning trade.

The euro has taken back its losses and surged back through the 0.90 level. A leading Irish economist has called on Dublin to threaten withdrawal from the euro unless Europe's big powers do more to rescue Irelands economy. A former official at the Irish central bank said if Ireland continues hurtling down this road, which is close to default, the whole of Europe will be badly affected.

Data at 09.45: European Commission Economic Growth Forecasts.

General:• Oil is trading lower in a narrow price today with the market affected by weak global demand and worries over OPEC production cuts. Nymex fell 31 cents to $36.20 per barrel.
• Spot gold is down $5.40 per troy ounce.

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Sterling rallies on back of ECB rate move and poor US economic data.

2009-01-16T14:17:00.003Z

Pound:
Sterling has seen gains across the board yesterday and this morning. The rate cut in Europe saw the euro weaken against the pound, pushing sterling back towards its highs from mid December last year of around the 1.1220. We have also seen cable rally as a wave of yet more weak economic data state side, dragged the dollar down and push the pound up more than four cents to hit $1.4890 in early UK trade.

The global economic slowdown continues to put pressure on the commodity currencies, as the pound rallies against the New Zealand, Canadian and Australian dollars. Don’t think that this is all good news for the pound however, as in these volatile markets, investors only have to see weak data from another economy, to start to sell off that currency, so its probably worth while taking small profits when they arise.

In a report from the Telegraph this morning, it showed the unemployment total has risen by more than 40,000 in little over a week, with experts warning that this is only the tip of the iceberg.

Euro:
The European Central Bank lowered its key interest rate by 50 basis points to 2% yesterday, matching an all-time low. The euro saw an initial sell off against the dollar and sterling, but soon halted those losses made against the greenback as the dollar had to swallow its own poor economic data. Against the pound however, the euro has carried on weakening into this morning session, heading below the 0.89 level. In comments made after the rate decision, ECB President Jean-Claude Trichet said the February meeting of the rate-setting Governing Council doesn’t mark an important date for policy makers, saying the next important policy meeting will come in March. He also indicated that eurozone economic news has been far bleaker than the ECB had been anticipating and that the outlook is darkening.

The Dublin government has nationalised Anglo Irish Bank, the Irish republic’s third largest lender, which has seen the collapse of its share price accelerate in recent days amid fresh reports of large scale deposit withdrawals.

Data at 10.00: E/Zone Trade Balance.

General:
• Oil prices are fairly mixed today , trading just below yesterdays price. Nymex is currently trading at $35.55 per barrel.

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ECB rate announcement hurts Euro

2009-01-15T23:32:00.001Z

As expected, today was a very busy day in the city. The ECB cut interest rates by 0.5% today as expected, bringing the base rate down to 2% and 0.5% above ours. However there were signals the bank would “pause for breath” and leave rates as they are in the February meeting. Jean Claude Trichet said
'Our next important rendezvous for monetary policy will be our March meeting, where we will have substantial elements of new information,' ‘the recent flurry of rate cuts was not necessarily over, saying 2% was not a floor for ECB rates’ A leading economist said:
'Unless data or equities or credit worsen from here, it's going to be hard to cut again in February. I would still go for (a cut of) 50 basis points in March,' said Kenneth Broux, Lloyds TSB economist. This was a key comment for me as it provides a clue to the market that there could be more interest rates to come, increasing the likelihood of a weaker currency or certainly making it less attractive to buy.
It appears that Europe is in the same boat as the US with almost-zero borrowing costs along with Japan, as well as our bank thought to be heading in a similar direction, down. The question between the UK and Euro zone is who will cut faster over the coming months? If the ECB starts to cut rates faster than us and bring their rates closer to our rate of 1.5% a higher GBP/EUR rate is inevitable. The rate is currently trading nicely up on the day at 1.1150 after some short term volatility, an ideal rate for any one needing to buy Euros soon (compared to the last few days)
I better get off to the shops and stock up on some warm clothes before I freeze my … in Iceland this weekend!

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European Central Bank Interest rate announcement

2009-01-15T12:19:00.002Z

Don't forget that today, we have the interest rate announcement from ECB and Jean-Claude Trichet’s speech (president) afterwards, is likely to cause high volatility to the market.

The market is expecting a 50 point cut to 2%, still 50 higher than our current base rate of 1.5% . A bigger cut is likely to cause more volatility and weaken the Euro by bringing it closer the the UK base rate and less attractive a as currency to investors.

Bear in mind also that Trichet's speech after the announcement will also be key. Any "bearish" tone here could weaken the Euro by providing clues on monetary policy and any further rate cuts.

Will keep you informed from my desk...

FX markets await European Central Bank interest rate decision

2009-01-15T11:23:00.006Z

Pound: Sterling was under pressure from the dollar yesterday as the fall in demand of US high street buyers sent a subdued mood round the worlds stock markets, and saw funds invested into the dollar and yen as a safe haven status.

The pound has been rallying back against the euro as we head into today’s interest rate decision by the ECB, where there is an expected rate cut by the central bank, which does seem to be already built in. If we see a bullish rate cut we may see more strength for the pound but if the ECB cut conservatively, we may see a swing in the euros favour.

We initially saw a drop off in early trade to give up just under a cent on the euro, but then the pound pulled back those early losses to trade at an intraday high of 1.1137. The global slowdown is having a detrimental affect on commodity currencies, and we have seen the pound benefit on the back of this. We have seen sterling hit a four week high of NZ$2.7393 against the Kiwi dollar, and also a four week high against the Aussie dollar of AUS$2.2256.

Euro: The euro is under marginal pressure against its major rivals this morning in yet another swing in the FX markets mood. Risk aversion is back as we saw huge losses posted on the worlds stock markets. The common currency lost over a cent on the pound, fell to a five week low against the dollar and also the yen.

Traders are also cautious on the euro ahead of the European Central Banks meeting today. The consensus calls for a 50 basis point rate cut, but policymakers could surprise on both sides of that mark. This would be the fourth consecutive month if they do cut, and part of the rate cut we have already seen built into some currency pairs.

We are beginning to see certain countries come under huge pressure in the Eurozone as Greece became the first E/Zone government to suffer a credit downgrade in the current crises and Germany’s GDP plunged far further than expected in the fourth quarter—a double hit that signalled the depth of Europe's recession.

Ireland is planning drastic cuts to prevent debt crises and is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of GDP by next year becoming the first country in the E/Zone to resort to 1930’s-style wage deflation to claw back competitiveness.

Data at 10.00: E/Zone Trade Balance.

General:
Citigroup fell 23% and the bank agreed to sell a majority stake in its Smith Barney retail brokerage to Morgan Stanley for $2.7B, likely the first step in a breakup of Sanford Weill’s financial empire. Oil prices are lower at $36.90/barrel on worries for demand from US after dismal retail sales data.

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Sterling continues to hold above 1.10 vs Euro

2009-01-12T23:41:00.004Z

After a relatively quiet weekend consisting of cinema to see slum dog millionaire http://www.imdb.com/title/tt1010048/ (a great film by the way), a dinner party (our job was to bring starters – god I feel old) and watching Man Utd vs Chelsea I was pleased to see sterling holdisome kind of strength at 1.1281 against the Euro.

Unfortunately market sentiment this week seems to favour sterling less as I discovered later on in the morning, with one report showing an expectation of UK rates hitting 0.5% by March, the pound closed down to 1.1093.

Tomorrow morning sees some reasonably important data out in the morning in the form of the UK Trade balance at 9.30am (Difference in value between imported and exported goods during the reported month). We also have Jean-Claude Trichet (the head of the ECB) speaking tomorrow at 9am in the lead up to their interest rate decision on Thursday.

Based on the fact the spot light is well and truly on the Euro this week (remember these markets are extremely fickle) and with the ECB meeting this Thursday the currency is feeling some pressure against most currencies and particularly the US dollar. For this reason I am expecting the pound Euro rate to rise further in the short term (next few days) between 1.1050 and 1.1300 at the highest.

Understandably I am seeing a lot of confusion from clients both buying and selling Euros of when to take the plunge. My answer to this is based on the level of risk an individual or company is prepared to take, after all they are looking for the best rate of exchange rather than being a currency trader / speculator!!! My feeling is that if you do not like taking risk, lock in at least some of your exposure by “booking a rate” on some if not all of your money. For those that don't mind taking some risk, Limit and Stop orders are ideal ways of catching the rate on a high by working for you 24 hours a day, 7 days a week.

In these markets it extremely easy to get caught out.

And if you really need a break for a couple of days, how about joining me in Iceland this coming weekend on some snow mobiles for my mate’s 28th birthday!

Thanks for reading

ECB Announcement on interest rates

2009-01-07T13:03:00.003Z

Please be aware the interest rate announcement for the Euro zone is at 12.45pm on 15th January 2009 not tomorrow the 8th as stated on my previous post.

The UK rate announcement remains unchanged at 12pm tomorrow the 8th January.

Please accept my apologies for an confusion caused.

Sterling rallies against Euro for second day - YEAH

2009-01-06T23:56:00.002Z

After hitting a high of 1.0834 yesterday from the morning low of 1.0379 could the Euro rate rise even further today? recent history says NO - But today my screens were all blue (positive) for sterling and after some false attempts to hit over 1.10 we finally got there at 4pm today! wow the rate looks good, but hang on a minute 1.25 also looked good in early November before the pound well and truly nose dived!

So what has been happening in the FX markets?

Well it seems as if this move is mainly down to a Euro story, I have highlighted some key points below:

European interest rates

Expectations for a rate cut by the European Central Bank helped create a free fall in the Euro particularly against the USD during the previous two days, and the euro may weaken further this weak as market participants expect the central bank to lower the benchmark interest rate by at least another 0.5% this year.

In contrast to this the pound fall seems to have stalled creating a situation where the Euro rate has to rise on the back of this new Euro weakness.The euro zone's annual rate of inflation has fallen below the target level for the first time since August 2007. This large fall in the inflation rate should help persuade the
ECB that a further cut in its key interest rate is needed, especially if any concerns over deflation start to become more prevalent.

Service sector
The euro-zone services sector shrank at its fastest pace
on record in Dec, making it more likely that the European Central Bank
will loosen policy quicker and perhaps on Thursday.

The question is with the UK still 0.5% lower on a 2% interest rate compared to the Euro zone at 2.5% will this gap be narrowed or widened?

I certainly think the current gap is one factor for why the pound is so weak and with expectations of a UK cut between 0.5% and 1% it will be interesting to see what the Euro zone do at 12:45pm on Thursday after the UK announcement at 12pm.

I am expecting the ECB to cut rates on Thursday and see further Euro weakness despite the UK cutting to. It seems at the moment that some attention has moved away from the UK to the Euro zone.

what's the picture? This is me featured sober at the start of my NYE party (thanks to my girlfriend for organising). I can't remember everything from the party but I must say the sing along (with all the leftover drunks) at 4am to Hey Jude by the Beatles whilst playing with my tambourine will be a memory for years to come! Thanks for reading

Markets reduce long euro positions single currency sold off.

2009-01-06T12:17:00.002Z

The pound took a huge step back against the euro yesterday as sterling took advantage of a broad sell off for the single currency. We saw over three and a half cents taken back for the pound as it hit 1.0750, and has continued its rally in this morning session, rallying to over 1.0850. This wasn’t so much strength for the pound, but gloomy news for the euro as the European economy suddenly looked as venerable as its rivals.

Economists , meanwhile, offered predictions for an interest rate cut this week from the BoE anywhere from 0.50% to a full 1%. The recent drop in the value of sterling against the euro and dollar appeared to be tilting the balance in favour of a half-point reduction. Sterling did see small gains made against the dollar, but these were limited to just over a cent gain as the dollar rallied on the back of optimism a broad based economic stimulus plan will help jump start growth in the US. The pounds gains were made despite the now expected poor economic data from the UK, which came in the form of the Nationwide’s headline measure of consumer confidence, which had fallen to 47 from 51 in November, despite the governments announcement of a £20B fiscal stimulus package and unprecedented cuts in interest rates by the BoE. UK house prices also posted weak data as we saw their biggest drop on the year in December, with prices 15.9% lower on the year.

Data at 09.30: PMI Services expected at 39 from 40.1.

Euro:
The euro was the major loser yesterday in the FX markets as we saw a broad selling off for the single currency. Against the dollar there was over four and a half cent fall to hit $1.3435, and against the pound, a dramatic four and a half cent fall to hit 0.9192 this morning. Investors were decreasing their holdings of the common unit due to growing concerns that the European Central Bank may cut its interest rates again next week.

The consensus is inflationary pressures in the E/Zone are easing and some central bank officials recently said additional monetary easing might be necessary. There was a sharp slowdown in Spanish and Italian inflation in December which is helping the view of a rate cut on January 15th. Overall, the economic outlook for the eurozone looks bearish, according to UBS, and against this backdrop, further easing by the ECB is expected up ahead and they believe recent gains will prove hard to sustain. Market are reducing long positions in the euro.

Data at 09.30: E/Zone PMI Services & Composite, 10.00: E/Zone CPI Estimate .

General:
Oil prices are sharply lower after rising sharply the previous day, trading at $48.65/barrel.

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Gordon Brown hints he’s not tempted to see Britain adopt the euro as yet.

2009-01-05T12:49:00.002Z

The pound seems to have taken a breather against the euro, after going very close to parity at the end of last year. We saw GB POUND/EURO hit an all time low of 1.0202 the day before New Years Eve, but it looks like profit taking from the euro and some resistance from the pound has kept sterling’s head to above parity levels. The view that the central bank in the UK will be more aggressive in continuing its policy of slashing interest rates, compared to a more conservative ECB in rate adjustment, has kept the pound under pressure, with investors dumping the pound.

This week in the UK, the Bank of England is set to cut interest rates yet again, although economists are divided by how much. The majority are forecasting a 75 basis point cut from 2% to 1.25%, but a larger cut is also possible. In the Andrew Marr show yesterday, Gordon Brown said he didn’t see how entering the euro would solve the current difficult financial issues. The fact we have nearly hit parity has led some to think entering the euro had taken a step closer.

Data at 09.30: PMI Construction

Euro: The euro is slightly lower against both the pound and dollar today, with selling by Japan’s exporters and institutional players. Profit taking took hold last week after the single currencies bullish run through December. The single currency was also hit against the greenback as a rally in equities favoured the dollar. The euros rally against the pound was also helped by the view that the ECB may be more cautious in cutting interest rates compared to its UK counterpart, with that sentiment seemingly already built into the market.

Looking ahead to this week, E/Zone inflation data should slip below the 2% mark for Dec as food and fuel prices fell further. Inflation has been a key issue in the eurozone, as some ECB members still see it playing a part in the conservative view of lowering rates less aggressively than the UK.

Data at 09.30: E/Zone Sentix Investor Conference.

General:•
World oil prices are higher today, fuelled by the ongoing conflict in the Middle East after Israel stepped up its military onslaught on Gaza. Nymex crude rallied to $46.99 per barrel. This has buoyed oil as up until the crises, it was falling due to low energy demand caused by a weak global economy.
• The FTSE 100 finished off last week in positive territory after gaining +127 points to hit 4561.79.

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Dollar higher against euro and pound—boost from rally in equities.

2009-01-05T12:41:00.005Z

The dollar got off to a solid start last Friday as we entered 2009, surging to a three week high against the yen and gaining on the euro and pound as US equities rallied on the New Year's first day of trading.

Just over two weeks ago, EURO/US DOLLAR was trading just over $1.47, but a rally in the dollar and some profittaking on the euro has seen the rate fall back to $1.3864 in the dollars favour. The safe haven status of the currency may also be leaning towards the greenback, as the conflict in the Middle East intensifies. The dollars position against the pound has seen over a three cent gain since last week, gaining from $1.48 to hit $1.4556this morning. Looking ahead to this week, reports on Dec unemployment and auto and retail sales will high-light the first full week of 2009—and likely show the recession is worsening.

Data at 15.00: Construction Spending expected at –1.3% from –1.2%. Speakers: Fed’s Yellen at18.15.

Watch the following video and ask yourself why the Us Dollar continues to strenthen.

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Sterling rallies against the Euro and USD before my NYE Party

2008-12-31T15:51:00.000Z

The Great British Pound has found some support today moving up 2.8% against the Euro (1.0224 to 1.0534) and 1.36% against the USD (1.44092 to 1.46242). Although markets are quiet seeing a half day for equities and an empty day for economic data, the USD has been victim to some institutional buying (big corporations buying sterling) Sterling however remains under pressure whilst the market expects interest rates to be cut further from their current level of 2% on 8th January.

Party

While the pound rallies further today I have even more of a reason to look forward to the house party my girlfriend is organising tonight, lets hope the neighbours don’t complain!!! Whatever you are doing this evening, have a very Happy New Years Eve and I look forward to speaking to you in 2009. Peace and Love. P.S. I am here until 3pm this afternoon returning at 8am on 2nd January (with or without a hang over)

Sterling trades down below 1.06 again

2008-12-23T23:13:00.002Z

After the release of yet more poor economic data for the UK economy in the form of even lower growth sterling has little chance of staying above 1.06 and instead moved down from 1.0650 to a low of 1.0530. So what next? Will we reach parity? Well as my colleague Leigh said the other day we are virtually there as highlighted by a rate of 1.04 I received today on my Euro Xmas holiday money (and that was good!)

The facts. The euro (which is basically tracked by the old Deutch-mark before the euro) and the sterling have seen big battles in the last 30+ years. However, only this month the euro rose while the pound fell and between the two massive movements, it busted through a 30 year resistance line (if you take into account the rate history before the Euro). This massive three decade low leaves the doors wide open for parity and £1 = 1 Euro. I am sorry to say it but expect the rate to reach this level and I am the first to admit I am surprised it moved below 1.10 to it's current level.

Anyway I'm sure there will be much to report on the 29th December when I return to my city desk from a well earned (for my girlfriend putting up with me) break in Rome Italy. For once in my life I am going to ignore the cost of a beer and the fact our currency is down 30% from 18 months ago and enjoy some beautiful Italian cuisine, architecture, art and women on scooters (sorry ignore that one)

Merry Christmas folks and remember to switch off your PC and spend as much time laughing with friends, family, partners or those who are close to you.

Peace and love. Remember being nice to people is not just for Christmas!

Over and out

Sterling tumbles on expectations BoE will be aggrieve on more rate cuts.

2008-12-18T11:13:00.003Z

Sterling took another huge hit against the euro yesterday as it continued its demise against the single currency. We have now seen sterling fall under 1.07, as another record low was posted. A wrath of negative economic data took the pound down against a basket of currencies, even falling against the dollar. Sales volumes at UK retailers plunged to a record low in the crucial trading month of December and the number of people claiming unemployment benefits in the UK posted its biggest monthly rise for more than 17 years.

Up to twenty-seven thousand staff are facing the New Year without a job, as Woolworths announces its last day of trading.

The Bank of England Policy Committee voted unanimously to cut its key bank rate by 100 basis points to 2%. Despite the doom and gloom surrounding the state of the pound, there are some sterling trackers who feel that the worst of the pounds decline is over. They argue that fears of UK deflation are overdone, and given the increasing downside risks to the eurozone economy, sterling could well be seen in a better light.

Data at 09.30: Retail Sales expected at –0.4% from –0.1%, Public Finances.

Euro:
The euro extended gains in Asia on Thursday, touching new highs against the dollar and yen as investors turned to euro-denominated assts offering higher yields. In afternoon trade, the European common currency hit $1.4495, its highest level since September 29th. The single currency also posted a new all time high against the pound of 0.9352, after the UK released another days worth of negative economic data.

Data at 9.00: German Ifo expected at 77.0 from 77.6.

General:
• Nymex oil is trading below $40 a barrel today, its lowest level in more than four years, despite OPEC’s announcement of a record production cut. Nymex for Jan is down 15 cents to $39.91 a barrel.
• Spot gold is down $2.40 at $865 after earlier soaring on the dollars weakness in the aftermath of the Fed’s rate cut.

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ECB’s possible hold on interest rate cuts.

2008-12-17T10:57:00.005Z

Pound:
Sterling will be the focus of attention this morning. It made up considerable ground versus the USD overnight but could be impacted negatively by this morning’s release of the BoE minutes from the December meeting and the unemployment report, which is forecast to show the claimant count breaking the 1 million mark. The minutes anticipate a unanimous –0-9-0 again but the comments should give us insight into the new year and first quarter. Also this morning sees CBI Realised sales.

9.30– Unemployment rate & MPC Minutes

The credit crunch song:

Euro:
The euro was lifted by relatively hawkish comments from the ECB’s Trichet, who played down expectations of another near term cut in rates, saying that the ECB wants to judge the effectiveness of the 1.75% of cuts delivered so far. This should see further gains against both GBP & USD.

Today sees CPI figures out at 10am 10AM—CPI Figures.

General:
• Saudis Call for record cut in Opec Output.
• BOJ under pressure as yen continues to rally
• Goldman Sachs reports $2.12billion loss.

Update: The Bank of England's rate-setting body voted 9-0 to cut rates to 2% this month.
Unemployment increases by 137,000

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Sterling sees short-term rally against the Euro after hitting bottom

2008-12-15T23:49:00.001Z

In early afternoon trading, the pound rose to 1.1248 before falling back under 1.1200 to 1.1174. The pound had initially hit the all time low against the Euro at midday falling to 1.1085.

The fact of the matter is that sterling is still very much under pressure in the currency markets made even worse by speculation that we will soon reach parity (£1 for 1 Euro). Our currency remains out of favour with investors as the UK and US look the most vulnerable to the meltdown in the financial markets.

We simply have nothing to fall back on after relying on the financial services industry as a large contributor to our growth for so long. Germany however, has a manufacturing industry and do not reply on their housing market like with have. If I think back to 18 months ago I remember overhearing commuters on my train into Liverpool Street boasting about the value of their house increasing. I certainly have not overheard any of them talking about the falls now happening in house prices, a true relaxation of what happens to spending when this is taken away!

The Euro has less history than the USD and Euro and with a more surreptitious central bank we have to ask the question as to what their stance will be on interest rates in coming months. The 0.5% advantage they have over sterling could easily change should they need to aggressively cut further like the UK in order to restore growth and employment which could help the pound.

Tomorrow morning should see high volatility in the market as a raft of French and German manufacturing, CPI and employment data is released from 7.45am. We then have UK CPI (inflation) data at 9.30am expected at 3.9%, any lower reading here could weaken sterling further as the BOE is provided with more room to cut interest rates.

I look forward to "fastening my belt" tomorrow morning for what is sure to be another action packed day on the markets and sadly the prospect of new lows against the Euro at least for the time being.

There are certainly two ways of looking at this economic crisis; and I know which stance I am taking from the quote below:

"The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary man takes everything either as a blessing or a curse" Michael E Gerber.

Sterling hits new low against Euro and down against the US Dollar.

2008-12-11T13:48:00.002Z

The pound has hit a new low today of 1.1252 against the Euro and looks set to drop even lower towards 1.10 (90p).

Manufacturing remains low despite over a 20% depreciation in the pound, export orders (products purchased from the UK from overseas remains low, as global demand falls at the same time as our currency (not what we needed!).

U.K. industrial output remained weak in December, while export orders slumped to a five-year low, according to Confederation of British Industry survey released today.

"With the export balance ticking down a little, the general weakness in this CBI survey is in line with both official data and other survey evidence showing that the manufacturing sector continues to contract at a severe pace, weighed down by both weakness in U.K. domestic demand and the global economy," said Nick Bate, economist with Merrill Lynch.

The pound is trading over 0.5% down against the US Dollar this afternoon at 1.4906.

I you are looking for Xmas dinner ideas this year please see the following video
Have a good day!

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Predictions suggest we may see a worse slump in UK than in the 80s.

2008-12-10T10:44:00.005Z

The pound dropped to new record lows against the euro yesterday, hitting just under 1.14 this morning. This was a combination of a better performing euro, on the back of better than expected German Business sentiment data, and more downbeat news on the UK economy. Britain’s economy shrank 1% in the three months to November after a 0.8% fall in GDP in the three months to October. Alistair Darling’s hopes that growth would resume in the second half of next year were hit by predictions that the recession could turn into a slump worse than that of the early 1980’s. Experts said that British industry is contracting at the fastest pace since 1991. This data has increased expectations that the Bank of England will cut interest rates by a further full point to an unprecedented low of 1% next month. A base rate of zero, or close to it,is no longer seen as improbable or even unlikely. It looks like pressure will remain on sterling for the short term.

Euro:
It was the euros day yesterday as it saw gains made on the pound to hit an all time high, and over a two cent made against the dollar. Yesterday saw the release of data from Germany in the form of the ZEW survey, which shows sentiment among German financial analysts and institutional investors. The data showed better than expected figures pointing to a slight recovery in German business sentiment during December. This pushed EUR/GBP to an all time high of 0.8772. The euro also took a positive move against the dollar as stock markets gained.

Data at 10.30: Italian GDP QoQ expected at –0.5 unchanged.

General:
• Canada’s central bank slashed its key interest rates yesterday by a large than expected 75 basis points to the lowest in over half a century and left the door open to more reduction to shore up an economy that if confirmed is now entering a recession. The rate now stands at 1.5%.

• World oil prices turned higher yesterday after early losses, while investors awaited a weekly US supply report for more clues about demand in the worlds biggest energy user. Nymex is now $43.28/barrel.

• The Swiss franc once famed for its safe haven status, has been falling steadily against the dollar and loosing out against the euro. Now with Swiss rates likely to nudge even closer to zero, prospects are only likely to get worse.

Euro exchange rate = 1.1429

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Sterling hits new low against the Euro

2008-12-09T19:57:00.004Z

The pound has sunk even further against the Euro today to a new all-time low of 1.1414 ! Bad news for the UK, bad news for the Pound

British factory output (manufacturing) data out this morning shopped a sharp decline for October to help add to the pile of bad news for the UK economy.

The Facts - sales are at a record low and the Christmas season is failing to ignite retail sales as evidence continues to show that “Great” Britain is entering a long and painful recession.

Further interest rate cuts look likely despite a reduction of 2.5% by the BoE in the last two rounds of announcements.

BoE policymaker Andrew Sentance said “recent survey data meant he now expected the recession to be as deep as previous downturns in the mid-1970s, early 80s and early 90s despite a significant easing of monetary policy by the central bank2

Spending

The head of Britain's biggest credit card provider Barclaycard, Antony Jenkins, told Reuters he expected Britons to spend 'quite a lot less' on cards next year because of waning consumer confidence and worries about the recession. As further poor economic news for the UK trickles into the market and as our interest rates fall even further down vs. the Euro zone, expect more drops in the rate.

A lot has changed in the last 27 years

With consumer spending continuing to fall along with house prices there has been a lot of ups and downs since my birth in 1981. To keep spirits high you must watch this hilarious Tesco, sorry I mean Woolworths advert from the same year.

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Today and Will I get the rate displayed on your home page.

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Pounds Euro report 8th December

2008-12-08T13:34:00.003Z

Despite government moves to kick-start economy, UK companies struggle for credit as the pound remains under pressure.

Sterling saw initial losses against the dollar on Friday, despite the huge loss in jobs state side. The first reaction was for investors to take cover in the greenback, which pulled cable down to $1.4550, but it now seems the view has swung towards the US economic outlook is bleaker than Europe's, as highlighted by the worse than expected US employment figures. Cable has taken an impressive four cents back on the dollar to hit over $1.4950 this morning.

Data from the UK hasn’t helped the pounds corner with the outlook for UK businesses deteriorating rapidly, despite government moves to kick-start lending. Third quarter data today from CBI showed service sector companies reporting steep falls in business and plans to scale back employment and investment. The CBI also said they were expecting “significant “ job losses in the coming months in that sector. We would normally see the pound fall on such data, but the Euro /Zone had just as bad data from Germany on Friday, so GB Pounds ’Euro has held firm, even posting over a cent gain in early morning trade to hit 1.1628. This week, the first UK retail sales survey for November is likely to show a further steep decline as consumers continue to reign in their spending.

Data at 09.30: PPI Input MoM –2.8% from –5.6%, YoY 6.4% from 13.8% previous.

Euro:
The euro is higher today against the dollar as reality sets in for the greenback. On Friday the euro took a tumble against the dollar as investors flew to the dollar on the back of such bad Jobs data stateside. It now seems the US data was so bad, that maybe the view the US will come out of this economic downturn first is not so widely held. EURO /US DOLLAR has taken back over two cents on the dollar to trade at $1.2880. The euro is having its own difficulties however, as data on Friday saw German manufacturing orders unexpectedly fall sharply in October, following on from the fastest decline in 18 years in September. The German car industry is also looking under threat, as the car industry worldwide is looking in a perilous position. The single currency has given up some gains made on sterling, now dropping to 0.86.

Data at 09.30: E/Zone Sentix Investor Confidence.

General:
Oil prices are rallying today, rising more than a dollar after sharp declines at the end of last week in reaction to a shocking set of US jobs data. Nymex is up $1.62 to $42.43 per barrel.
• France leapfrogs UK in economic table—Britain's economy has been overtaken by France, and according to economists, could even fall behind Italy next year, The UK is already behind the US, Japan, China and Germany, reflecting the pound’s to record lows against the euro.

Pounds to Euros = 1.1582

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Sterling continues to trade lower

2008-12-05T17:27:00.006Z

The economy is plunging deeper into recession despite emergency tax cuts and the multibillion-pound bank bailout, the Bank of England said yesterday.

After yesterday’s decision to cut rates to their lowest level in more than 50 years, the decline in manufacturing and consumer spending continues.

The problems for the pound are seeing no end whilst the prospect of further interest rate cuts continue with some economists now predicting that rates could go to 0%. This is great for me on a tracker mortgage (that thankfully C&G will pass on) but terrible for those at a later stage in their life relying on interest from their savings. And to top things off high inflation (currently) makes their money worth even less.

In reference to manufacturing I spoke to one client yesterday who highlighted a 61% drop in orders for their products, despite a weak pound making the price of British produced goods cheaper to those buying outside the UK.

Yesterday also saw the UK’s biggest mortgage lender (Halifax) report a fall in house prices of 2.6% last month adding further problems for sterling.

The Bank of England has put a lot of blame on borrowing or lack of it being provided by high street banks to consumers and businesses alike, slowing down the flow of money considerably.

The Prime Minister said he hoped the combination of falling mortgage bills, lower petrol prices, and marked drops in the cost of gas and electricity expected next year would “help home owners to feel more secure” but will this help my clients needing to buy currency with the feeble pound????

I am expecting sterling to remain weak for the rest of this year and beyond as UK economic news continues to disappoint as well as the “threat” of further interest rate cuts encouraging investors to sell anything denominated in sterling. In addition to this there is another ongoing issue of our interest rates in comparison to the Euro zone which are more attractive at 2.5% to our 2%. On this basis do not be surprised if sterling falls into the 1.13 level against the Euro.

FUN FUN FUN

No matter what happens in the city or our economy there is always time for laughs, fun and the odd adrenaline rush hence why I’m dodging fast cars in the valleys this weekend - http://www.walesrallygb.com/

Have a great weekend and in the words of my friend John Wright – Make everyday count!

Sterling Euro = 1.1493

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Pounds to Euro rate report 5th December

2008-12-05T12:53:00.003Z

Sterling continues to slide as record low posted against the single currency.

The pound came under huge pressure from its major rivals in the run up to the BoE interest rate decision yesterday, posting record lows against the euro of 1.1483. Expectations the Central bank in the UK would be more aggressive in its cut than its European counterpart were realised when 100 basis points were slashed to bring the base rate down to 2%, equalling its lowest rate for over 400 years. Just prior to the rate cut, sterling had fallen to a new six-year intra-day low of $1.4480 against the dollar, but has fought back hard as the greenback itself saw aggressive selling in the afternoon session. The states is battling with its automaker sector problems, as the government decide whether to bail out the big three automakers or let them go to the wall. Cable rallied back to trade at $1.4724 this morning.

Euro:
The euro traded at an all time high against the pound yesterday, hitting 0.8722. The single currency also gained on the dollar, taking over one and a half cents to hit $1.2765. An aggressive rate cut by the European Central Bank seems to have convinced investors that eurozone officials are doing what is necessary to improve their struggling economy. The ECB slashed rates by three quarters of a percentage point, which surpassed expectations and brought the central bank’s benchmark rate down to 2.5%. The lower ECB rates might, under normal conditions, turn investors away from the euro as it tends to lower returns on euro-based assets. But amid the global financial basis, where frozen-solid lending conditions are the main problem, analysts said the rate reduction was seen as an overall positive for the euro. Analysts also praised ECB President Jean Claude Tricket, saying his press conference after the rate decision helped calm some fears over the eurozone’s economic outlook.

Data at 10.00: German Factory Orders MoM expected at 0.2% from –0.8% previous.

General:
• Oil prices held steady near four-year lows Friday but analysts said they were likely to fall even further as economic data signalled a global economic downturn may be deep and prolonged. Nymex is trading at $43.83 per barrel. Traders are calling for prices to fall as low as $25 a barrel next year.
• Some UK banks refuse to pass on full interest rate cut to homeowners.

Pounds to Euro rate = 1.1493

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Pounds to Euros report 4th December

2008-12-04T10:53:00.002Z

Bank of England expected to cut interest rates—investors dump the pound.

The pound dropped again yesterday, with its overall value tumbling to its lowest for 13 years, as another spate of dire economic news left markets convinced that the Bank of England will order a further, drastic cut in interest rates today. Expectations that the Bank's Monetary Policy Committee will cut rates by another full percentage point, and perhaps repeat last months aggressive 1.5 point reduction, leapt after a key survey suggested that the services sector, making up almost two third’s of the economy, shrank at a record pace last month.

Anxieties over the weakness of the pound were rekindled as it sank once again on foreign exchanges. The trade weighted index of sterling's overall value against a basket of currencies tumbled to 80.4, its lowest level since January 1996. the pound lost as much as 2.7 cents against the dollar, dropping to $1.4668. It has now fallen by more than 27% against the dollar over the past 12 months, and by almost 20% on the trade weighted index.

Sterling is almost touching on the all time lows against the single currency. We have seen the pound fall below 1.16 level this morning to hit 1.1590, just off the record low of 1.1545 a few weeks ago. Analysts are calling for 1 full percentage point reduction in the interest rate decision at midday, with some calling for 150 Bp cut.

Data at 12.00: Bank of England Rate Decision expected at 2% from 3%

Euro:
The euro is continuing to benefit from the pounds worsening position as the single currency is closing in on its all time high of 0.8661. This is despite worse than expected economic data which has been coming out of the E/Zone. Retail sales fell more than expected in October as recession and rising unemployment in the 15 nation currency bloc weighed on consumer spending. The retail sales data are likely to reinforce expectations that the European Central Bank will lower its main interest rate by at least a half percent from the current 3.25% level today.

The view that the ECB won’t be as aggressive in a cut as the Bank of England is also benefiting the strength of the euro against the pound. The euro s position against the dollar has been range bound the last few days, trading in-between $1.26—$1.27 in the run up to the interest rate decisions today.

Data at 10.00: E/Z GDP QoQ expected at –0.2% unchanged. 1245: European Central Bank Rate decision expected at 2.75% from 3.25%.

General:
Sweden has cut interest rates by 175Bp to 2%
• Oil prices are lower, falling below $46 a barrel at multiyear lows in a market dominated b y declining demand and dismal economic news. Nymex crude fell 82 cents to $45.97

Update:
As the market prepares for the bank of England interest rate announcement at 12pm today, sterling has lost over 1.5% against the US Dollar moving down to 1.4530 and 1% against the Euro to 1.1529 - an all time low. This precipitous move highlights the pressure the UK and sterling is under right now. Expect more volatility.

Pounds to Euros = 1.1515

Pound versus Euro report 3rd december 2008

2008-12-03T22:47:00.006Z

Interesting day ahead for the pound.

Today saw the pound remain low against the Euro as further weakness in our currency prevented any claw back from Monday's dramatic move down. The rate hit a recent low of 1.1617 at 10am this morning after another key indicator (service sector growth) for growth in the UK. The data showed our service sector (what we now have come to rely on in recent years) reduced at the fastest rate in 12 years. The sector which counts for 74% of activity has "pushed the door" open even wider for a large interest rate cut. I along with some others think the bank will cut rates by more than 1% (which is now expected) and instead by 1.25-1.5%. If this does happen we are likely to see a historical day for the pound with big losses against all the major currencies including the Euro and US Dollar. Either way expect volatility.

We also have Halifax house price data due out at 9am and sorry but no prizes for the result of this data. In addition to the bank of England interest rate announcement we also have the European central bank (ECB) release their decision on interest rates at 12.45pm. We then finish the day with an ECB press conference at 1.30pm. I am expect interest rates in the Euro zone to be slashed by 1% and downbeat news for their economy, the only problem being the pound is well and truly in the "line of fire" right now. This is likely to result in a lower GB POUND / EURO rate. Our exposure to the financial turmoil is clearly the greatest right now.

On to some humour… Please find included below the picture I promised from Saturday night. I was under clear instructions by my mates that I must dress as a hero or villain. After speaking to a few clients I settled on going as a "robber" with a SWAG bag (unfortunately is not featured). No laughing.

Guilty Pleasures night at Koko in Camden, London http/www.guiltypleasures.co.uk/

Toby is second from left to right.

Pound versus Euro = 1.1626

Introducing Toby Fischer and Currency Today

How to make a transaction with Currency Today

How to buy Euros - who will handle my funds

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What exchange rate will you offer me and when to book a rate

Who are Currency Today and Will I get the rate displayed on your home page.

Is my money safe - Are there any extra charges?

Can I buy if the rate moves up

How long does it take to open an account and how do I get my money to you?

How many years has Currency Today been established?

Why use Currency Today rather than the bank - Is there a minimum amount?

Can I buy holiday money?

How does it work if I am selling currency

Euro Pound report 3rd December

2008-12-03T15:37:00.003Z

Pound takes back some losses made against the greenback.

Yesterday was by no means a pretence for a comeback for the pound, but at least sterling managed to halt its decline to deeper depths. Its gains were really down to the dollar giving back some gains as the greenback was dragged down by a resurgence in equity and oil prices. Cable took over a cent from the dollar to hit $1.4903, but had touched over $1.50 earlier in the day.

It was defiantly a rollercoaster day for the currency markets, a day to stay clear of if ever there was one. Sterling's position on the euro has traded sideways, with GB Pound starting out today’s session within 2 pips of yesterday price. In an interview with BBC newsnight, French Foreign Minister Christine Lagarde said she challenged the UK Prime Minister’s claim that the UK is uniquely placed to cope with financial turmoil, and that she hadn’t recently heard any suggestion
from British official that the UK would like to join the euro.

In an interview in the Telegraph, Professor Buiter, a founding member of the Banks Monetary Policy Committee, said he expects rates to be cut to zero before long, the reason why this will not be done in one go but two to three is because they’ll be worried about what it would do to the pound. He is predicting another 1.5 point cut on Thursday.

Data at 09.30: PMI Services expected at 41.0 from 42.4.

Euro:
The euro is little changed today, as investors wait for Thursday’s European Central Bank meeting, which is expected to result in a healthy rate cut to battle recession. The talk now is who will be more aggressive with the rate cuts, the Bank of England or the Eurozone? The consensus at present is the BoE, which may help the euro's position against the pound even further.

Yesterday, the euro gained slightly against the dollar when US stocks recouped a portion of the day earlier losses. Against the pound, the single currency is still looking extremely strong, despite weak economic data released. Tuesday saw industrial producer prices across the 15 nation eurozone dropping 0.8% in October. Economists were forecasting a 0.3% monthly drop. The euro’s recent gains comes despite data from various member countries, namely Spain, that all is not well in the E/Zone. The number of people registering as unemployed in Spain rose 171k to 2.99 million in November. According to the Spanish Labour Ministry, the number of people registering as unemployed in Spain has gone up by almost 900k or 43% in the past 12 months.

Data at 09.00: E/Zone Retail Sales MoM expected at –0.4% from –0.2%.

General:
Nymex gained $1.08 to $48.06 yesterday after slipping to three-year lows on demand worries.
• Metal prices have fallen further over the last four months than occurred during the worst years of the Great Depression.

Euro to Pound = 1.1692
Best Holiday money rate = 1.1418

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Euro on a roll Iceland and maybe Denmark look to join Euro.

2008-12-02T10:44:00.003Z

Sterling is steamrollered by major currencies—huge losses against dollar & Euro.

After the positive week last week which gave the pound some much needed breathing space, Sterling was battered, UK shares slumped and gilt yields touched historic lows on Monday as weak manufacturing and mortgage data added to concerns that Britain was facing a deep recession. Cable was down by 3.5%, a drop of six cents from a high of $1.54 to hit $1.4807, and its worst one day decline against the dollar since a 5% slide following the pounds ejection from the European exchange rate mechanism in September 1992.

The dramatic slump in shares prices yesterday saw risk aversion come back into the markets, which will continue to strengthen the safe haven currency status of the dollar and yen. The pound collapsed against the euro with a four cent drop to hit an intraday low of 1.1728, from the high of 1.2142. The data released yesterday raised expectations that the Bank of England would cut interest rates aggressively again on Thursday. The recession appears to be deepening with the downturn taking hold across the whole economy.

Data at 09.30: PMI Construction expected at 34 from 35.1.

Euro:
The euro fought back against the pound yesterday which left sterling with a bloody nose. The single currency took 2.9% off the pound to hit an intraday high of 1.1728. This was after the UK saw damming data from both the manufacturing sector and the mortgage sector. The euros position against the dollar was a similar story to its other major rivals as risk aversion saw funds piling back into the greenback, pushing EUR/US DOLLAR down to $1.26. Economic data from the E/Zone was not pretty reading either, but was not as bad as the UK.

Manufacturing activity in the E/Zone contracted for the sixth consecutive month in Nobvember, sinking to a fresh record low. Having taken this on board, the euro is on a kind of a roll. Icelanders are clamouring to join, as soon as they can get into the EU. The Danes seem ready to abandon their long rebellion and sign meekly on the line. A Danish referendum is pencilled in for March. Eastern European states are trying to engineer as fast they can to escape the hell of semi-fixed currencies. Everybody wants a safe port in this Force 10 storm. There are also rumours that undisclosed MP’s in the UK are saying they may be persuaded for the UK
to join the single currency!!

Data at 09.00: E/Zone PMI MoM expected at –0.3% from –0.2%.

General:
The Reserve Bank of Australia slashed interest rates by 100 basis points to 4.25% amid concerns the economy is sliding toward its first recession in 17 years.

GB Pound V Euro = 1.1705

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Sterling plummets against Euro and US Dollar

2008-12-01T18:17:00.003Z

This morning opened with misery for sterling and continued throughout the day ending in a drop of over 2.5% (1.2044 down to 1.1728) against the Euro and over 3% against the US Dollar (1.5287 to 1.4807) since 8am. Today's losses came after a series of bad data for the UK economy.

Firstly net consumer lending dropped sharply in Oct as mortgage lending slumped. Mortgage approvals hit an all-time low according to data released by the Bank of England a figure much lower than expected. This weak data will provide the BoE with even more space to slash interest rates by a further 1% to bring rates sharply down to 2%. If this happens we will see UK interest rates at their lowest since 1951 and equaling the lowest in the bank's 314 year history!

In another blow for sterling U.K. house prices fell again last month with the year-on-year decline the largest on record, according to a survey by Hometrack. The company, which specialises in providing research and data on the residential property market, said house prices fell 1.1% from October and by 8.1% on the year in November.

Sterling is currently trading down at 1.4851 against the US Dollar and 1.1756 against the Euro. Expect further pressure on the pound leading up to Thursday's interest rate decision as the market continues to expect big rate cuts. There are even rumors of co-coordinated interest rate cuts similar to those that occurred on the 8th Oct by the Euro zone, European central bank and US and Sweden amongst others.

In an attempt to add humor to this dire news for sterling I promise (providing my friends send me the photos) to post a picture of myself in fancy dress (from Saturday night) on my blog!!!

Have a good evening.

Sterling versus Euro = 1.1768

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Euro Pound 28th November

2008-11-28T17:17:00.002Z

Euro weakness finally seems to be feeding through as the bad news for unemployment was released today. The rate of unemployment in the 15 countries that use the euro rose last month as tightening credit conditions and weakening confidence led businesses to cut costs.

Figures released by the European Union statistics agency ( Eurostat) today showed the euro zone's unemployment rate was 7.7% in October, up from 7.6% in September. When viewing the effects this data has on monetary policy and the European central bank the chance of bigger interest rate cuts by the bank next week is more likely in order to curb a dramatic slowdown in their economy.

This rate could quite easily hit above 1.21 by the end of the day with more volatility likely. The current rate to buy US Dollar is 1.5321.

Euro Pound = 82.72

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Sterling trades higher against the Euro 27th November

2008-11-27T18:05:00.002Z

Despite being a US holiday (Thanks giving) today sterling has gathered considerable pace against the Euro hitting a high of 1.1979 at lunchtime, a key level that if broken in coming days could see the market rally above that much needed 1.20 level.

Business and consumer confidence in the U.K. fell to a record low this month despite the largest cut in the Bank of England's key interest rate since the early 1980s. The ongoing

drop in confidence suggests the economy will continue to slow in the months ahead and puts even more pressure on the Bank of England to use a fast fix solution (or at least attempt to) by cutting interest rates further.

The move today which also saw similar positive moves yesterday shows the pound clearly testing the 1.20 mark and although many view sterling in a “ bad light” right now the Euro itself is exposed to it’s own set of problems, with some of the weakness breaking through. Don’t forget it was only 3 weeks ago we traded at 1.2489 so although things remain bleak for the UK economy and our currency expect a fresh round of action next week when we see both central banks announce their decision on interest rates.

Remember like all West Ham fans (including me,) the markets can be extremely fickle. I am off to buy a batman and robin suite for an event this weekend http://www.guiltypleasures.co.uk . Have a good evening.

Sterling V Euro = 1.1946

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Pound euro report 25th November

2008-11-26T13:17:00.003Z

Sterling hits two week high against the greenback.

The pound shot to multi week highs yesterday with a surge in risk appetite on the creation of a new lending facility by the Federal Reserve to support consumer credit and the market for mortgage backed securities. The rally in cable was helped by grim news from the US stating the US economy weakened as GDP growth dropped by -0.5% in Q3. This saw the pound shoot up against the dollar with nearly six cents clawed back in the favour of sterling. We saw the pound start of day trade around $1.4898, but then managed to rally back in the afternoon session, hitting an intraday high of $1.5574. Sterling's rally also saw it gain on the single currency as over two cents was gained on the euro to hit 1.1903.

The equity markets gained again yesterday for the third consecutive day, dragging down the dollar and helping other currencies, namely the pound and euro take their turn in some well needed gains. In a speech yesterday morning, Bank of England Governor Mervyn King commented that more interest rate cuts may be on the cards because banks were not passing the cuts on in full, saying the central bank may need to cut rates more than they would otherwise have done

Data at 9.30: GDP Q3 expected at –0/5% unchanged. Private Consumption & Index of Services.

Euro:
The euro made good gains against the dollar yesterday as the single currency benefited from risk appetite remerging in the markets, with equity markets rallying, pushing the greenback lower. Over two and a half cents was pulled back against the dollar to hit an intraday high of $1.3079. The euro didn't really help itself against other currencies as doom and gloom picture was painted in the German car auto industry. More than 1.5 million workers in Germany depend on the industry for their jobs, with the industry facing one of its worst crises ever. Spain released weak housing data today as home sales transactions fell at an annual rate of 27%, pointing to a continued downward correction for Spain's once flourishing home-building industry.

This weeks news from the eurozone has pulled its currency down against the pound, as we saw more than two cents lost for EUR/GBP to hit an intraday low of 0.8401. No data today.

General:
• The Thai Baht has so far avoided any downturn against other currencies despite calls for the government to stand down in the wake of widespread protests. The main airport in Bangkok has now been evacuated.

• Woolworth shares have been suspended as talks continue to rescue the business.

Pound euro = 1.1797

How bad is it in the city? Watch the following video.

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Sterling versus Euro Mervyn King

2008-11-25T13:07:00.003Z

Mervyn expressed a lot of what we already know(more pessimism over our economy) hurting sterling further against the Euro with the rate currently touching 1.1695

Key points

Interest rates may have to be cut more aggressively to maximise benefit from cheaper borrowing The refusal of many banks to fully pass on this month's 1.5% interest rate cut will force the monetary policy committee to rethink its approach. Following the interest rate cut some banks withdrew their tracker mortgages. “They are now introducing them, but with a higher spread from the base rate than before," Economic climate had worsened dramatically in the last two months since Lehaman collapse The banking sector is now extremely reluctant to lend to business and households

It is clear the bank is going to cut interest rates further in the short term which will in turn make the pound even less attractive. The upside of this move will be cheaper domestic borrowing and a strong growth in export as products and services become even cheaper. This may well help close our trade deficit (difference between the buy and sell rate) but does not help the majority of my clients with pounds in their pockets. Perhaps a trip to Italy this Christmas for me was a bad idea? Thanks for reaidng.

Sterling versus Euro = 1.1695

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Alistair Darling finally announced the death of "Prudence"

2008-11-25T11:16:00.003Z

Please find some detailed information below written by my economist friend Paul Dawson.

On November 25th 2008, Alistair Darling finally announced the death of "Prudence" following a long period of separation.

In reality, Prudence was a lady who had been unceremoniously dumped in the interests of political survival and left to fend for herself.

Prudence first came to public attention in the mid 1990's when a long established but unloved political party was attempting to revive its fortunes under new leadership.

Relations between the Labour party and the interests of business and finance had never been easy but Tony Blair and his right hand man Gordon Brown were determined to charm their way into office by persuading the City and business interests that a future Labour government would not lead to a return of high taxation, over-regulation and profligate public expenditure all culminating in a run on the currency and financial retrenchment.

In the course of their schmoozing many innocent prawns paid the ultimate sacrifice!

http://en.wikipedia.org/wiki/Prawn_Cocktail_Offensive

New Labour as it was then known wanted to bury memories of its unhappy economic past (not least the visit by the bailiffs from the IMF in 1976) and present a new image to the electorate.

Goodbye Great Britain IMF Crisis Kathleen Burk

Being a Scotsman, Gordon Brown called upon Prudence to act as his shield of fiscal rectitude. After they had moved into Downing Street he committed a newly elected Labour goverment not to increase income taxes and to maintaining strict controlling public expenditure which meant that he adhered to the spending plans of his predecessor for his first two years in office. To entrench his strategy he established a new fiscal framework which committed the goverment not to borrow to finance current expenditure and finally without any discussion with his Cabinet colleagues he granted the Bank of England operational independence.

http://en.wikipedia.org/wiki/Golden_Rule_(fiscal_policy)

The early years of the relationship were happy ones for all concerned and the electorate returned New Labour to power in 2001 and 2005. However, behind the public smiles cracks were already beginning to emerge. Prudence may have had many admirers in the City but Gordon was a politician with a wandering eye and he secretly coveted Tony's job next door. While Prudence made regular appearances during Budget day speeches and on other special occasions Gordon decided that a tryst with Profligacy was his true path to power.

This meant more public expenditure to help pay for teachers, nurses, doctors and other public servants. These could be paid for out of the proceeds of growing tax revenue as the City and the UK property market boomed.

It also and more unhappily involved creative accounting with the public finances in the form of PIFI deals and an unwillingness to come clean on e.g. public sector pension liabilities.

As time wore on it became increasingly clear that Gordon and Prudence's relationship was but a marriage of convenience as they led separate lives.

Following Tony's departure from office in 2007 (to spend more time bolstering his bank balance after some ill advised property investments) Gordon achieved his life's ambition.

Sadly for him events began to go awry.

He had once proclaimed the end of boom and bust in the British economy but, like King Canute his hubris ignored the realities of the economic cycle and more importantly the fact the Britain is a trading economy affected by events overseas.

http://www.viking.no/e/people/e-knud.htm

These included the creation of a whole host of weird and wonderful financial instruments predicated on lending money to poor people to enable them to purchase US residential property.

This investment was made the expectation that property would continue to increase in value which is bizarre when one looks at past economic history.

People who invest in property do not usually have the money to pay for it outright so rely on mortgage finance or borrowings to pay for it. As lending standards slipped and speculative borrowing forced up house prices a bubble was created which has now burst. The consequences of this have ripped through the world banking system and threatened to destabilise the entire world economy.

Gordon's successor Alistair has been left to pick up the pieces and start over again. The nice decade as Mervyn King once put it is well and truly over.

The UK government failed to save during the good times and spent instead - its reserves are inadequate to put it mildy. The personal sector i.e. you and me has also binged and maxed out on its credit cards whereas the corporate sector and the soverign wealth funds in the middle east are in a healthier position.

As the UK economy slides into recession Alistair has made what can only be described as an amazing gamble to kick start the economy. It is like taking out a loan to go and gamble on the roulette wheels in Las Vegas - he might strike lucky but an awful lot could go wrong and we as taxpayers will be picking up the tab whatever happens.

Initial stock market reaction was favourable and sterling appreciated against the US$. However, sterling fell against the Euro and when the Pre-Budget report is examined more closely I suspect that the reaction will worsen. The UK economy is unbalanced with an over-large financial sector and it will need to re-build its manufacturing base. Rising property prices gave an illusion of growing wealth that has now been shattered.

The proposed level of debt issuance by the UK government is staggering and if the international money markets are not convinced that the UK government is up to the job of economic management it will not buy the new gilt issues unless compenstated with higher interest rates. There is also a real risk that sterling will take a further nose dive. Fears expressed over the risk of deflation could after this initial stimulus be replaced by the grim spectre of inflation reappearing.

We are truly between the devil and the deep blue sea.

http://www.phrases.org.uk/meanings/between%20the%20devil%20and%20the%20deep%20blue%20sea.html

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Pre-budget report Pounds to Euros exchange rate

2008-11-24T17:36:00.004Z

Sterling remains weaker against the Euro

The government set out its plan and will spend £billions of borrowed money to fund tax cuts in an attempt to “soften the blow” of major slow down in our economy. He did however warn that taxes would have to rise later to pay for the boost. (Delayed pain?)

Tax cuts

His plan revealed a cut in VAT from 17.5% to 15% for 13 months and extends help for small businesses, low earners and households in a package worth up to £16 billion. This temporary reduction is the equivalent of the Government giving back some £12.5 billion to consumers to boost the economy. The idea I think is for the government to borrow money in the short term in order to pay back funds when the economy improves again.

UK Business

Corporation tax for small firms was set to rise to 22% from April 2009 from 21% as part of a staged increase set out in the March 2007 budget, the plan to do this has been abolished.

'This will provide a boost to small companies, leaving their tax rate in 2009 unchanged,' he told parliament. 'I believe these steps will help businesses through the current difficulties and enable them to invest.'

Darling said an estimated 75,000 businesses would benefit from this change.

Sterling remains low against the Euro as the market continues to digest the report with many mixed signals being given around the market. On the positive side for the pound this is obviously a life line by the government for our ailing economy but is it a good measure longer term? The more negative comments for the UK surround the concern over more borrowing and the burden this will have on the economy in coming years.

We are currently trading way below the high of the day (1.1883) at 1.1768. Watch out for the MPC including our governor Mervyn King speaking (again) tomorrow morning at 9.45am to parliament’s treasury select committee. As we know a lot can happen when these guys “talk” as the market looks for clues to if and when further interest rate cuts may occur in the UK.
Lets Go Shopping !!!!

Pounds to Euros = 1.1772

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Pre-Budget Report 24th November 2008

2008-11-24T10:51:00.004Z

UK to announce pre-budget report to support economy.

Sterling managed a slight gain on the dollar in late trade on Friday, and has managed to hold onto those gains going into this week. The dollar was weakened by a rally in oil and the stock markets, and saw a bailout by Citigroup weighing heavily on the currency. Cable took back over two cents to move from $1.4706 to hit $1.4921 this morning. Sterling's move against the euro has been less severe as the pound is still trading at near all time lows against the single currency.

In the UK this week, the pre-budget report is expected to deliver some good news for the UK, with spending plans set to be accelerated and tax cuts to be introduced. Hours before Chancellor of the Exchequer Alistair Darling delivers his keynote pre-budget report, Prime Minister Gordon Brown will say Monday there is little inflationary risk from taking bold fiscal action to stimulate the economy. The measures won’t keep the economy out of recession but they may limit its depth and duration.

Data at 15.30:Pre-Budget Report

Euro:
The euro gained against the dollar over the weekend as the greenback saw a sell off across the board. This was despite the PMI for the service sector in the eurozone dropping off to 43.3 from 45.8 in October, while the manufacturing PMI fell to 36.2 from 41.1 a month earlier, and the lowest reading in over a decade. The PMI’s message is unambiguous: the pace of recession is deepening. Analysts are expecting a bold move by the ECB in interest rate cuts next month, probably twice the 50 bp cut already pencilled in. This would normally have a detrimental affect on its currency. But as we all know, this are not normal times.

Data at 10.00: E/Zone Industrial New Orders MoM expected at –2.2% from –1.2% previous.

General:
• Oil prices gained slightly today, remaining near $50 a barrel as the market prepared for an expected OPEC production cut next weekend. Nymex was trading at $50.56.
• Markets in the US will be closed on Thursday for Thanksgiving Day holiday. The New York Stock Exchange also will shut early Friday.

Pound Euro pre-budget report exchange rate = 1.1826

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Pounds against the Dollar 20th November 2008

2008-11-20T13:26:00.016Z

Sterling sees huge swings against the dollar, slightly up on the euro.

Yesterday witnessed huge swings for the pound against the dollar
with a move in sterling's favour of 3 cents. Around 10.00am there was over a cent made on the greenback in about 5 minutes, and then around 2.00pm another two cents gained, pushing cable to hit an intraday high of $1.5249.

Rumours in the market pointed to an investment vehicle from the middle east sending over substantial sterling payments for the purchase of stock in a major UK bank. This seemed to happen in two tranches, as the sale of dollars and purchase of sterling rallied the pound. The pound now seems to have given up those gains made, as we have now finished up lower than yesterday’s open. The dollar benefitted from a late sell off in US stocks which helped push cable even lower. The pound did rally against the euro early yesterday morning, which seemed to be on the back of the cable move but has also levelled off this morning. Sterling has moved up against the commodity currencies as we have seen a positive move against the Aussie & Kiwi dollars as well as the Rand.

Data at 9.30: Retail Sales expec. –0.8% from –0.4%, Public Finances and Public net Borrowing.

Euro:
The euro lost ground on the pound and dollar yesterday as the currency markets were all affected by the strong buying of pounds. The euro gave up value against the pound around 10am, at the same time as cable which seemed to indicate the same reason for the dollars decline. The euro pushed up on the dollar at a similar time as dollar selling went in the single currencies favour. But then came the slide in world stock markets, with the US markets in particular suffering the most, which in turn pushed the greenback up on the euro. The euro has now lost over two cents on the greenback to trade at $1.25 this morning. The single currency was also weakened slightly by news that interest rate cuts by the ECB are possible, according to ECB Executive Board member Lorenzo Bini.

Data at 10.00: E/Zone PMI expec. 42.5 from 43.6. 12.00: CPI MoM expec. –0.2% from 0.1%.

General:
• Asian currencies except the Yen, but including The Australian and Kiwi dollars slid against the dollar and pound yesterday, prompting several central banks to defend their currencies as investors continued to dump risky assets.

• Oil prices dropped again as prospects for weaker demand took the price per barrel to $52.82.

Pounds against the Dollar = 1.4868

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Euro Pounds exchange rate report today 19th November 2008

2008-11-19T19:28:00.003Z

Whilst the pound has rallied against the Euro today towards 1.1980 the BoE members remain downbeat on the UK economic outlook. Bank of England Deputy Governor for Financial Stability John Gieve said Wednesday that recession is just beginning in the U.K. and other advanced economies, and that more U.K. rate cuts may be necessary. Nevertheless, we are "clearly not out of the woods yet" and global financial markets remain "badly impaired," he said. While banks look to be "more secure," "In the wider economy, we are only in the early stages of a recession in the advanced economies and of the slowdown in emerging markets," Gieve said. "So we must be ready to take further action if required whether monetary, fiscal, or directly in the financial sector."

This again highlights the BoE readiness to cut interest rates further in the UK whilst possibly widening the gap further between us and the Euro zone which is now 0.25% higher at 3.25% for the first time since it’s introduction in 1999.

Expect sterling to remain under pressure after these comments but in particular if retail sales are poor tomorrow morning at 9.30am, thanks for reading.

Euro Pounds currency exchange rate today = 1.1942

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Sterling maintains some strength against the Euro

2008-11-18T22:48:00.002Z

Sterling hit a high of 1.1956 early this morning before level back towards last night's level at the mid 1.18 area. We are currently trading at 1.1852

The rate moved down after some key economic data released for the UK surrounding inflation and ultimately the BoE monetary policy was released at 9.30am. The CPI (Consumer Price Index) release came out much lower than expected. This "opened the door" for more rate cuts in the next BoE meeting. We may well see further weakness in the coming days bearing in mind we have more key UK data including the BoE minutes from their last interest rate decision tomorrow morning and retail sales on Thursday.

Economists are forecasting that the Bank of England's decision to cut the benchmark interest rate by 1.5% to 3.00% nearly two weeks ago was unanimous among members of the Monetary Policy Committee. The question the market is now asking is will we see another cut this year at the December 4th meeting.

Well uncertainty continues around the UK economy and interest rates coupled with lower rates than the Euro zone the exchange rate is likely to remain under pressure before moving back up above 1.20 after 4th December, providing interest rates stay where they are.

Thanks for reading.

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Sterling stays in low range against the Euro

2008-11-17T09:02:00.003Z

Sterling stays in low range against the Euro

The eurozone is now officially in recession, mainly due to a slump in Germany, Europe's biggest economy, and Italy, while France has narrowly escaped the same fate. The economy of the 15 countries using the euro shrank by 0.2% between July and September (two or more consecutive quarters of contraction are regarded as a recession). So with the Euro zone in a recession why is the exchange even lower against the pound? Well quite simply our economy is looking much worse than expected.

The Economic facts

The UK is looking to suffer the most precipitous economic slow down in two decades next year with even more around us out of work. Unemployment could rise to nearly 3 million by 2010, the Confederation of British Industry said.

They expect the British economy to contract by 1.7% in 2009 and blamed the fallout from global financial turmoil (common reason) for the massive revision to the 0.3% growth forecast it had issued in September.

The global economy is suffering its worst financial crisis in 80 years, with governments around the world injecting trillions of dollars into the banking system to keep it afloat.

'What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting,' said John Cridland, CBI deputy director-general.

'The banking system has come under immense strain, sending consumer and business confidence plummeting in its wake.'

The CBI said it expected unemployment to reach 2 million by the end of this year and rise to 2.88 million, or 9% of the workforce, in 2010 (highest since 1993) -- the year by which the ruling Labour Party must call a general election.

Reduced consumer spending and falling commodity prices will ease price pressures, the CBI said, predicting the inflation rate would fall to 1.7% giving the BoE room to cut rates further and to 1.5%, by 2010.

Today sees the release of the rightmove house price data which is likely to show the housing market in further decline. UK CPI on Tuesday should reveal the start of a falling inflationary trend (as predicted by the BoE) while the bank of England minutes on their last interest rate decision are released on Wednesday. The majority of Euro zone data including the manufacturing sector is released on Friday.

Despite the fact sterling is likely to be vulnerable to further poor UK economic data I feel we are oversold (too low) against the Euro with a move back towards 1.19 a possibility early this week. If the Euro zone is not in so much financial difficulty there is sure to be a demand for a weaker domestic currency longer term to help boost exports. We are currently trading at 1.1710 and with West Ham keeping a clean sheet this weekend I'm going into this week with some optimism for the rate based on Euro weakness. Thanks for reading.

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Sterling Euro

2008-11-14T09:04:00.003Z

Sterling hits new all-time lows against the Euro

For a second day running the pound has experienced another "smashing" , reaching new lows of 1.1585 as the market remains concerned over the condition of the UK's economy worsened by King's comments made whilst delivering the BoE inflation report Wednesday.

Gordon Brown has urged world leaders to act urgently with co-ordinated fiscal (government spending)and monetary policy (interest rate setting) to shore up the global economy, ahead of a G20 financial crisis summit this weekend.

Strong words:

'There is a need for urgency. By acting now we can stimulate growth in all our economies. The cost of inaction will be far greater than the cost of any action.'

Policymakers are growing increasingly concerned about the prospect of prolonged recessions in major economies such as the US, Euro zone and UK as the impact of the credit crisis spreads into the real economy affecting employment in particular.

Brown has signalled his government will announce fiscal stimulus measures in its pre-budget report on Nov. 24 and many economists think the Bank of England will cut interest rates to record lows, following a shock 1.5% point cut to 3% this month.

Euro- zone Economy

With Germany officially in a recession according to data released yesterday, many clients are asking why the Euro is strengthening. At the moment sterling is massively under pressure and under the spot light. Mervyn King has hindered sterling strength further by stating that the UK is likely to be hit the worse by the global slowdown and financial crisis. In addition to this we have to face facts; the UK is clearly the most exposed to the US turn down and the collapse of the banking sector.

Watch out for Jean Claude Trichet (Euro zone equivalent to Mervyn King) speaking tomorrow afternoon at 1.30pm. What happens next heavily depends on how down beat his comments are on the Euro zone. Please hold tight for a third day of declines for the pound.

Sterling Euro = 1.1712

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Sterling takes centre stage as the pound plummets

2008-11-13T17:46:00.003Z

Sterling takes centre stage as the pound plummets

Pound:
The pound fell broadly yesterday, dipping under $1.50 against the dollar for the first time since 2002, reaching as low as $1.4896. Sterling also fell as low as 1.1905 against the euro, the lowest level since the single currency was created. BoE Gov. Mervyn King said the UK economy is probably already in a recession and suggested more interest rates cuts are coming, even after the central banks 150 basis point cut last week that brought the key rate to 3%. King also spoke specifically about sterling's weakness, saying the decline in the UK currency isn’t surprising. But he added it will be a concern if it goes to far and creates upward pressure on inflation. Some analysts are calling for the pound to weaken some more as economic conditions continue to deteriorate faster than expected.

Sharply rising unemployment data and the BoE downgrading its outlook for growth “reinforce sterling’s ’worst performer’ reputation.” At BNP Paribas, Hans Redeker, global head of foreign exchange strategy, suggests the pound could make it all the way down to $1.27 in the next few months.

Euro:
The euro entered into unchartered territory yesterday, not of its own doing, but courtesy of the pound as sterling dramatically collapsed. The euro saw a new high hit of 0.8412, the highest level since its inception in 1999. The reason for the sudden move was helped due the BoE Governor Mervyn King painting such a bad picture on the state of the UK economy. This saw investors sell of the pound across the board, which saw the euro rally against sterling, hitting new highs all the way! Will the euro keep gaining against the pound is a very good question? At BNP Paribas, currency strategists suggest that the pound may well have run its course against the euro for now. They reckon that the increasingly large competitive gap within the eurozone countries can only be closed by a deflationary cycle that will involve prolonged underperformance in some countries.

General:
• German GDP contracted by 0.5% in the third quarter, putting Europe's largest economy in recession.

• Asian shares sink on global economy fears—concern over whether the US can succeed in its massive banking rescue.

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Pound to Euro rate today

2008-11-12T18:09:00.002Z

The pound has fallen to new records against the Euro (1.1940) and new multi year lows against the Dollar (1.4891) after BOE’s inflation report stated that not only has the UK fallen to recession in the last quarter but the inflation seems to be easing rapidly. The bank of England Inflation report was delivered by Mervyn King at 10.30am this morning after data at 9.30am for the UK showed British unemployment rose to its highest level in more than a decade. The number of people without a job rose to 1.825 million in the three months to September.

A pint of beer in Europe has shot up over 15% in the last 12 months.

Expect the pound to fall further...

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GB Pound Euro Rate today

2008-11-12T10:15:00.004Z

Sterling continues to trade near all time lows.

The pound has seems to be stuck in the 1.22 are at the moment against the Euro with no near term prospects for a correction back towards 1.25 and above.

Today is an important day for the pound as we see the release of claimant count data (Change in the number of people claiming unemployment related benefits during the previous month) at 10.30 which is even more important than normal as we establish how fast pasted the deteriorating employment market is becoming in the UK. As I have mentioned before and as many of you know as unemployment rises so to will the number of people defaulting on their credit as money becomes harder to earn and in short supply. Any particularly weak figure here e.g., above 40k could put sterling under even more pressure against the Euro.

Unemployment is not the only concern as we see the Bank of England release their latest inflation report (This report includes the BOE's projection for inflation over the next two years. The BOE Governor holds a press conference immediately following the report's released). If this data shows that inflation is now moving down back towards the target of 2% this is likely to hinder sterling further as it provides the BoE to reduce interest rate faster. This would normally devalue a currency as it provides a weaker yield (%) on investor’s money.

We also have Mervyn King speaking at the same (11.30am) and we know what happened the last time he spoke or in case you didn’t the pound weakened significantly overnight.

I am expecting the rate currently trading at 1.2222 to trade into the 1.21 area by the end of today.

Thanks for reading.

GB Pound Euro Rate today = 1.2252

UPDATE:

UK Inflation report – Mervyn is continuing to discuss the UK economy and inflation. Some key points are:

- Inflation expected to have reached it’s PEAK

- 2009 - Negative growth of -0.5% expected

- 2009 - Delaftion (negative inflation) expected

- UK l to be affected most by financial crisis and banking sector slow down

- Collapse of Lehman Brothers historical outcome for the UK banking sector

Sterling is being hurt further (is this ever going to stop! We are all thinking)

GB POUND / EURO = 1.2190 GB POUND / US DOLLAR = 1.5276

Please accept my apologies for stating report was due at 11.30am, actual release is 10.30am

Introducing Toby Fischer and Currency Today

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How do I open an account with Currency today

What exchange rate will you offer me and when to book a rate

Who are Currency Today and Will I get the rate displayed on your home page.

Is my money safe - Are there any extra charges?

Can I buy if the rate moves up

How long does it take to open an account and how do I get my money to you?

How many years has Currency Today been established?

Why use Currency Today rather than the bank - Is there a minimum amount?

Can I buy holiday money?

How does it work if I am selling currency