Daily Insight

The Pound rose for the eighth day in succession against the Dollar yesterday despite a distinct lack of economic data released in Europe or the States and that trend looks set to continue this morning as Sterling advances to fresh two-year high at 1.9440 following a particularly hawkish rhetoric from the Chancellor of the Exchequer. During a parliamentary debate in the House of Commons, Gordon Brown reiterated that UK economic growth will exceed the government's initial forecast this year to accelerate towards 2.5% by March 2007. The sustained growth in the UK economy will only fuel speculation that the Bank of England will have the scope to continue raising interest rates next year with the market currently pricing in a possible rise in February.

The Euro held firm against the majors yesterday despite concerns from several Euro-zone finance ministers regarding the recent strength of the single currency. Thierry Breton, the French Finance Minister, reiterated that it was important to be "highly vigilant" on the Dollar's recent decline while others urged the ECB to monitor the pace of economic growth as rigidly as they consider inflation. The Euro received a boost this morning as German consumer confidence rose to a five-year high this month as the impending value-added tax increase encouraged consumers to carry on spending before its introduction next year. There is some significant economic data released this morning as the ECB continues to monitor the M3 money supply into the Euro-zone and the consensus forecast is for a rise from 8.5% to 8.9% in the figures for October.

The Dollar continued to tumble against the majors yesterday, falling to a fresh two-year low against the Pound and a further 20-month low versus the Euro as the hangover from the Thanksgiving Holiday continued to weigh on Dollar sentiment. There is a mass of economic data released in the States this afternoon with the focus falling on existing home sales for the month of October and the report is expected to show further drop in the U.S housing market. Sales of previously owned homes may decline for the seventh month in succession last month as higher interest rates continues to weigh on demand. Elsewhere, the Dollar may come under further pressure as orders for durable goods is expected to drop by 4.0% last month while U.S consumer confidence may increase following the sustained drop in fuel prices over the same period.

Data Released 28th November

EU 09:00 M3 / 3 Month Moving Average (October)
EU 10:00 OECD Presents Economic Outlook

U.S 13:30 Durable Goods Orders (October)
U.S 15:00 Existing Home Sales (October)
U.S 15:00 Consumer Confidence (November)

written by Adam Solomon