GBPEUR/GBPUSD
The Pound opened this morning above 1.1200 on interbank, reaching the highest level since November 19th, however has deteriorated slightly against the dollar trading to a low of 1.6113 during trading this morning.
Data released yesterday morning confirmed that U.K retail sales fell unexpectedly in November (the first monthly drop since May) and U.K consumer confidence also fell for a second month in December -raising further concerns about the strength of an economic recovery in the U.K. Retail sales volumes were down by 0.3% against a previously anticipated 0.4% rise. A separate survey by the Confederation of British Industry (CBI) has confirmed that retailers expect sales to weaken further in January.
Official figures from the Office of National Statistics have confirmed that U.K public sector net borrowing hit a record high of £20.3bn during November – this level was lower than initial forecasts – but still remained at the highest level since records began in 1993. Public sector net debt as a percentage of overall UK economic output now stood at 60.2%. Analysts confirmed that the overall level of public borrowing for this financial year was on track to hit the £178bn previously forecasted by the government.
Q3 Gross Domestic Product Data has confirmed that the Irish economy saw modest growth in the third quarter of this year. Figures just released by the government’s statistics agency showed gross domestic product rose by 0.3% compared with the quarter before. The figure indicates the country has now pulled out of what was one of Europe’s worst recessions.
Business Confidence in Germany has increased to the highest level in more than a year for the month of December. Recent reports have painted a mixed picture about Germany’s recovery. While the ZEW institute said four days ago economists are tempering optimism with regards to the outlook. Bundesbank this month raised its forecast for 2010 growth and Volkswagen AG posted the strongest monthly sales gains this year for the month of November.
Data released this morning confirmed that French business confidence fell in December to 89 from a revised 90 during the month of November. This is the first drop nine months on concern that fading government stimulus measures may slow the economy’s recovery from its worst slump in six decades.
EUR/USD
The Euro is attempting to claw back some of the sharp losses against the dollar in the wake of the positive market reaction to Wednesday’s FOMC statement. It has recovered from 2-month lows of $1.4305 to begin the morning around $1.436 but the currency remains vulnerable as traders continue to look to cover dollar short positions ahead of year end.
Alongside the Federal Reserves statement, the Euro is also being undermined by a spike in risk aversion in respect of recent developments in Dubai and Greece as well as underlying concerns about the outlook for the global economy.
Elsewhere overnight, the Bank of Japan announced that it was leaving policy unchanged as it concluded its monthly policy meeting. This was in line with market expectations and in terms of policy meetings brings to a close a year that has seen extraordinary moves by global central banks in an effort to restore confidence and stability to the world economy.
Related posts:
- FX119 Foreign Exchange Daily Insight – The Pound rallies against the Euro, after UK inflation accelerates
- FX099 Foreign Exchange Daily Insight – The Euro rallies amid signs that the ECB are ready to withdraw emergency stimulus
- The Pound rallies back above 1.1200 against the Euro, after the European economy contracts at the fastest pace in 13-years
- FX096 Foreign Exchange Daily Insight – The Pound rallies strongly against the Dollar, amid a revival in risk appetite
- FX095 Foreign Exchange Daily Insight – The Pound declines to a one month low versus the Euro
