Exchange Rate Forecasts

Yesterday’s UK data was modestly bullish for sterling, and the market is reacting predictably, with GBPEUR bouncing just ahead of the 1.4500 support (again!!). GDP was up 0.6% for the fourth quarter of 2005, against expectations of 0.5%. The MPC vote revealed that Stephen Nickel was once again alone in his opinion that interest rates [...]

BOE minutes were 8-1 in favour of no change, with one member, Steve Nickell voting for a cut, the same as last time. The GDP figures were decent, suggesting no rate cut in the short term. GDP rose by more than expected in Q4 and at its fastest pace for a year as services output [...]

Unsurprisingly we are seeing a bit of consolidation after the major moves of Monday, with cable holding above the 1.7810 support, and GBPEUR sitting close to 1.4500. Data for today includes the German IFO Business Climate survey at 09:00, followed by the minutes of the last Bank of England meeting at 09:30. If some members [...]

The dollar sold off sharply on comments from Federal Reserve officials suggesting that the rate cycle is nearing its peak. This was already sidely expected, but the market took it as a green light to sell the greenback, so we saw cable and EURUSD rocket through the major resistance levels at 1.7810 and 1.2200/10 respectively. [...]

The dollar firmed on news that jobless claims fell to their lowest level since 2000. Initial claims were 271,000, down 36,000 on the previous week. On the other side of the coin, the “Phillidelphia Fed’ ” survey showed a slowing in manufacturing in the area. Traders are currently pricing in a highly likelyhood of another [...]

Euro-zone Industrial Production strengthened in November, suggesting that the economy is gaining momentum, with a 1.3% increase on the previous month, better than analysts had been expecting. This adds weight to a building expectation that the ECB will raise interest rates again in the near future, probably at the March meeting. Oil price are on [...]

Yesterday’s UK CPI was slightly weaker than expected, increasing the case for a cut in interest rates. Sterling duly sold off on the initial reaction, but this didn’t last, and one gets the feeling that the interest rate cut is now widely expected. US manufacturing and industrial production was very much in line with expectations, [...]

UK CPI came in at 2.0% Vs 2.1% forecast…The main downward impact came from lower petrol prices. The data means that inflation is under control, increasing the Bank of England’s scope for cutting interest rates, resulting in weaker sterling.

UK ODPM house prices data for the year to November rose 2.5 pct after a 1.8 pct increase year-on-year to October and was slightly below the market consensus of a 2.6 pct annual rise. UK PPI in unadjusted terms rose to a record 17.2 pct for the year to December from 13.6 pct year-on-year to [...]

Despite the better than expected US deficit, the dollar failed to build on Thursday’s rally, and ended the week on a weak footing. This could be symptomatic of a change in market sentiment, with good news being absorbed, and bad news driving price. Plenty of data both sides of the pond this week, starting with [...]