GBPEUR/GBPUSD
In the approach to Christmas, Sterling remains under pressure – challenging long-term key support at $1.6000 this morning against the dollar, and trading within an extremely tight range against the Euro.
Gross Domestic Product data (GDP) released this morning confirmed that the U.K economy shrank by less than previously forecasted during Q3 – bringing the longest recession on record closer to ending.
The report issued by the Office of National Statistics confirmed that GDP for the U.K fell 0.2% against a previously anticipated 0.3% drop.
The Confederation of British Industry (CBI) raised its 2010 economic growth forecast yesterday, and suggested that the Bank of England could pause its bond-purchase plan in February. Policy makers have pledged to print £200 billion GBP of new money to help increase spending and shake off Britain’s longest recession on record. The U.K economy has contracted by 5.1% in total compared against figures released this time last year.
The Royal Institution of Chartered Surveyors have forecasted this morning that house prices in the U.K could potentially rise as much as 2% during 2010.
In the Euro-Zone, A report from the European Commission released yesterday suggested that the economic recovery in the Euro-Zone region is gathering momentum but at a slow pace.
Markets will be monitoring closely the results of final GDP figures for the United States, due to be released into the market this afternoon at 13:30.
EUR/USD
The euro remains under pressure versus the dollar this morning, starting the day around $1.4300 level on interbank as the dollar continues to be supported by speculation that the U.S economy may be recovering faster than originally anticipated.
This latest recovery could however, prove to be purely technical – There is speculation in the markets that even though the Federal Reserve might be contemplating an exit strategy, the current interest rate differential is unlikely to provide the dollar with a sufficient yield advantage for the currency to maintain it’s upward momentum.
Whilst trading around three-month highs versus the euro, the dollar has also reached two-month highs versus the yen overnight. These gains were fuelled by growing speculation that the Bank of Japan will take further steps to ease monetary policy.
As well as broad based dollar strength, the yen has reacted negatively to recent comments made by the Governor of the Bank of Japan, who confirmed yesterday that policy makers are ready to act “promptly and boldly” to fight deflation.
Data released 22nd December:
11:00 External Trade Balance Ireland
13:30 Final Q3 GDP U.S
14:00 Business Confidence Belgium
15:00 New Home Sales Data U.S
Related posts:
- Sterling continues to remain under pressure
- FX126 Foreign Exchange Daily Insight – Sterling remains under pressure against the dollar
- FX067 Foreign Exchange Daily Insight – The Pound continues to decline on King’s comments
- FX124 Foreign Exchange Daily Insight – The Pound opened this morning above 1.1200 on interbank
- FX087 Foreign Exchange Daily Insight – The Pound declines after King reiterates that a weak Pound is helpful
