Despite the fundamental lack of UK economic data released yesterday, the Pound succumbed to comments from Bank of England policy maker, David Blanchflower, who was the sole voice for a cut in interest rates in July, said that the economic outlook has worsened significantly over the past month.
In an interview with BBC Radio, Blanchflower told journalists that the recent decline in retail sales and contraction in other areas of the economy meant that policy makers needed to “reconsider and take another vote next week.”
The recent spate of negative economic reports indicates that growth in services, manufacturing and housing have all slipped into negative territory as the UK economy edges closer towards the first recession since the early 1990s.
An estimate of gross domestic product showed that economic growth matched the slowest pace since 2001 earlier this week while policy makers are concerned that rising unemployment will induce a period of stagflation as prices accelerate at the fastest pace in a decade.
The Bank of England have kept interest rates unchanged at 5.0% as record high food and energy costs saw prices reach 3.8% in June and that prompted MPC member, Timothy Beasley, to voted for an increase in rates as he publicly stated that inflation is primary threat to economic growth.
The Pound declined against the Dollar yesterday while the UK currency again took advantage of broad Euro weakness to finish the session back above the 1.2700 level last night as the focus switches to the Nationwide house price data tomorrow.
The report is expected to confirm that prices slipped a further 1.2% on the month while falling 7.2% from this stage in 2007 as tighter lending conditions means that consumers are unable to borrow while rising mortgage rate are discouraging first time buyers.
The subdued sentiment surrounding the Euro and the outlook for the European economy continued yesterday as the EC sentiment index showed that industrial and consumer confidence dropped by the most since the September 11th terrorist attacks in 2001.
The Euro’s overwhelming advance against the Dollar this year has weighed on export growth while the impact of the credit crisis combined with record high commodity prices has hurt consumer confidence and seen inflation rise at the fastest pace in 16-years.
The index of sentiment slumped to a reading of 89.5 in July, which vastly exceeded initial forecasts and the tone of the report has limited the ECB’s scope to raise interest rates beyond the current 4.5% as growth in the economy slides towards contraction.
Nevertheless, the European Central Bank has maintained a staunchly hawkish resolve on monetary policy and the Euro may find some support this morning as the harmonised index of consumer prices is expected to confirm that inflation edged above preliminary forecasts this month.
The Dollar consolidated just under the one month high against the Euro yesterday while the U.S currency also registered gains versus the Pound despite oil prices rising more than $4 a barrel in New York after the U.S Energy Department reported the first decline in inventories for five weeks.
Elsewhere, the Dollar stood firm and found some support after the ADP employment report posted an unexpected increase in U.S payrolls this month following a revised drop of 77,000 in June, which was smaller than previously estimated.
However, the ADP report cannot be relied upon as a guide to current labour market conditions as the last 6 reports have all shown an increase in job growth while the government’s nonfarm estimates have pointed to contraction in the U.S workforce.
Data Released 31st July
U.K 07:00 Nationwide House Prices (July)
EU 10:00 Flash HICP (Harmonised Index of Consumer Prices) (July)
The Pound extended its decline against the majority of the major currencies after a report from the Confederation of British Industry showed that an index of UK retail sales slumped to the lowest level in 25-years as tighter lending conditions restricted borrowing and curtailed spending.
The tone of the report mirrored last week’s sales figures for June and is just the latest indication that the economy is teetering on the brink of recession.
The Pound subsequently lost ground against 15 out of the 16 most actively traded currencies as a separate report from the Bank of England showed that mortgage approvals sank to the weakest level since records began in 1999.
In the aftermath of the report, traders pared bets that the BoE will cut interest rates for the third time this year and risk letting inflation spiral well above 4.0% over the coming months. The Pound also declined against the Dollar, revisiting the ‘Fibonacci’ support level at 1.9850, before breaking through by the close of trading last night after oil prices slid a further $3 in New York.
The price of crude oil fell to the lowest level in 12 weeks, dropping 17% since hitting a record high earlier this month, amid speculation that demand is weakening.
The geo-political issues in Iran and Nigeria are threatening supply but oil prices declined as the U.S Dollar rallied to a one month high versus the Euro and curbed the appeal of commodities as a hedge against inflation.
The Euro plummeted against the Dollar yesterday and also breached back above 1.2700 by the close last night amid further suggestions that the recent negative tone of economic data means that the European economy is hurtling towards contraction.
The single currency failed to take advantage of broad Sterling weakness despite reports in Germany that the annual rate of inflation held at the highest level in 12-years this month after the surging cost of raw materials forced manufacturers to pass on higher costs to the consumer. Prices rose 3.4% from this stage in 2007 and faster inflation may accelerate the decline in growth as consumer and business confidence fall to the lowest levels on record.
Nevertheless, the European Central Bank has maintained a staunchly hawkish stance on monetary policy and despite the recent evidence, policy makers still believe that there is room for a further increase in borrowing costs.
The Euro may continue to decline against the majors as the as the EC economic sentiment index is expected to confirm that industrial and consumer growth slipped further into negative territory this month.
The Dollar advanced to the highest level in a month versus the Euro while the U.S currency also made significant gains versus the Pound following a surprisingly positive report on consumer confidence, which provided some optimism that the economy will pull back from the brink of recession.
Elsewhere, the Dollar was largely unaffected despite reports of a further slump in the U.S property market as the S&P;/Case-Shiller index showed that house prices fell at a faster pace than anticipated in May.
A separate report showed that the Conference Board’s index of consumer confidence unexpectedly rose higher in June and mirrored the recent report on U.S retail sales, which conveyed a surprising resilient in spending.
The Dollar also found some support as oil prices fell under $123 a barrel last night while the U.S currency rose earlier in the session as reports that Merrill Lynch & Co plans to sell $8.5 billion of stock and bonds raised speculation that the economy is through the worst of the credit crisis.
In terms of economic data, the Dollar’s resolve may tested this afternoon as the ADP employment index is expected to show a further softening in the U.S labour market and provide an indication of Nonfarm Payrolls on Friday.
The Pound initially declined against the Euro yesterday, dropping to the lowest level in a week, while the UK currency also revisited the trend support at 1.9850 versus the Dollar after a report from Hometrack Ltd showed that house prices fell in July by the most in at least seven years.
The average cost of a home in Britain plummeted 4.4% from this stage in 2007 to £168,500 as the index recorded the biggest annual drop in prices since records began in 2001.
The accompanying statement from the London-based research company suggested that house prices will remain suppressed over the coming months with prices likely to fall further in the Autumn.
The fallout from the credit crisis has forced banks and lenders to limit their best offers while also increasing mortgage rates well in excess of the base rate.
Rising inflationary pressures have limited the Bank of England’s scope to lower interest rates and with consumer prices expected to breach 4% in July, some policy makers may be leaning towards a tightening bias even at the risk of a recession.
Nevertheless, the Pound bounced back against the Dollar later in the session after crude oil prices increased following reports that Shell reduced Nigerian production because of militant attacks on pipelines.
In terms of economic data, the Pound will be susceptible to reports that UK mortgage approvals dropped to 37,000 in June, from 42,000 the previous month to signal further weakness in the housing market.
The Euro took advantage of broad Dollar weakness yesterday but failed to hold on to earlier gains versus the Pound after a gauge of German consumer sentiment showed that confidence in Europe’s largest economy dropped to lowest level in over five years.
Record high energy costs have forced manufacturers to pass on higher prices to the consumer as inflation accelerated to 3.4% in Germany last month and eroded the outlook for economic growth.
The recent Ifo sentiment index showed that business confidence in the region had slumped by the most since the September 11th terrorist attacks while the ZEW survey for investor confidence dropped to the lowest level on record.
The report yesterday is just the latest indication that growth in the European economy is slowing and the Euro may struggle to gather momentum this week amid the release of the EC business and consumer confidence surveys.
The Dollar again failed to break the major support at 1.9850 versus the Pound and also suffered a strong intraday slide versus the Euro amid concerns that U.S financial company losses will widen further and reduce the probability of an increase in U.S borrowing costs.
The Dollar declined for a second day against the majority of the major currencies after Fed policy maker, Gary Stern, told the Financial Times that the credit crunch will get worse, slamming suggestions that the economy will bounce back towards the end of 2008.
Elsewhere, the Dollar failed to find any support amid reports that the Nigerian militant group MEND (Movement for the Emancipation of Niger Delta) claimed responsibility for an attack on Nembe Creek trunk pipeline and increased concerns over production in the region.
Elsewhere, the Iranian President, Mahmoud Ahmadinejad, was reported as saying that the Middle East’s second-largest oil producer has 6,000 uranium-enriching centrifuges.
The simmering tensions between Iran and Israel helped to lead oil prices to a record high earlier this month and concerns over supply saw prices increase 1.2% in New York.
The Dollar will again be susceptible to volatility in stock and commodity markets today and the U.S currency may also come under further pressure as an index of house prices is forecast to fall 16% in May.
Data Released 29th July U.K 09:30 Consumer Credit (June) U.K 09:30 Mortgage Applications (June) U.K 11:00 CBI Distributive Trades Survey (July)
Following on from last week, the volatility surrounding the Pound is likely to continue as the UK currency initially strengthened against the majority of the 16 most actively traded currencies despite reports that the UK economy matched the slowest pace of growth since 2001.
According to a report from the Office of National Statistics, gross domestic product expanded just 0.2% in the revised figures for the second quarter with the economy growing just 1.6% from this stage in 2007.
A number of key industries have reported a contraction in growth with manufacturing and services both slipping into negative territory while the impact of the credit crunch and a larger drop in UK consumer spending have increased the probability of a recession.
The outlook for the economy is at its weakest since the early 1990s and is eroding support for Gordon Brown’s Labour government, which suffered a hammering blow in the Glasgow by elections last week.
Tighter lending conditions is weighing on consumer’s ability to spend while falling house prices have suffocated growth but the Bank of England are reluctant to lower interest rates at inflation accelerates at the fastest pace in a decade.
Nevertheless, the Pound rallied in the aftermath of the GDP numbers as the 0.2% increase matched the result from the previous quarter and showed that at least the economy hadn’t declined any further.
However, the UK currency erased any earlier gains as broad Dollar strength brought the market back towards 1.9900 by the close of trading on Friday and in a relatively quiet week in terms of market data, the Pound may struggle to bounce back against the majors amid the release of the Nationwide and Hometrack house price surveys.
The Euro has remained in a tight trading range against the Pound and despite last week’s move towards the resistance at 1.2760, the market came back to find support at 1.2650 amid hawkish commentary from a number of ECB officials.
Despite concerns that European economy slipped in negative growth in the second quarter, the Central Bank has been determined to bring inflation back down from the highest level in 16-years.
The Euro also strengthened marginally against the Dollar as German import prices rose 1.5% in June while governing council member, Klaus Liebscher, said that the Central Bank has the room to raise interest rates again and prevent second round effects.
The renewed appetite in Dollar sentiment has coincided with the remarkable fall in oil prices as crude oil consolidated under $125 a barrel despite concerns over supply in Iran and the threat of militant attacks in Nigeria.
Elsewhere, the U.S currency also found some support as index of consumer sentiment showed that confidence unexpectedly increased in July, rising from the lowest level since 1980 as tax rebates and a rally in the stock market improved optimism.
The University of Michigan final index of consumer sentiment increased to a reading of 61.2 in July and although the survey will come as a blip in an otherwise weak strain of economic data, the report does provide some hope that the economy can bounce back in the second half of the year.
The Pound recorded widespread gains against the majors yesterday, rising to a seven week high versus the Euro and briefly revisiting the $2.00 level following the release of the minutes from the Bank of England’s last policy meeting.
The voting pattern of the nine strong committee showed that at least one member of the MPC is leaning towards an increase in UK borrowing costs as some members believe that inflation becomes the primary threat to the economy.
Consumer prices have risen to the highest level in 16-years as the escalating tensions in the Middle East pushed the price of crude oil to a record high of $147.29 on July 11th. UK manufacturers have been forced to pay record high prices for raw materials and have little choice but to pass that cost on to the consumer, stoking the already persistent inflationary pressures.
Nevertheless, many areas of the economy are reporting slower growth as the impact from the U.S subrprime mortgage crisis spreads through services, manufacturing and housing. Tighter lending conditions means that consumers are unable to spend and support growth while a declining labour market may see the economy slip into recession later this year.
The Pound also enjoyed a strong intraday rally against the Australian and New Zealand Dollar as MPC member, Timothy Besley, elected to raise interest rates in July and said that accelerating inflation is putting the Bank’s credibility at risk.
The Bank of England’s handling over the Northern Rock affair and the credit crisis in general has already reduced confidence in the Central Bank and with prices forecast to hit 4.5% later this year, policy makers may have little choice but to raise interest rates.
The surprisingly hawkish tone of the minutes saw the Pound rally against the majority of the 16 most actively traded currencies but the short-term momentum in Sterling is unlikely to last over the coming weeks.
The majority of the committee voted to keep rates at 5.0% this month aside from David Blanchflower, who again highlighted the necessity to reduce borrowing costs and the Pound may be tested this morning as a report from the Office of National Statistics probably showed that retail sales fell 2.5% in June.
The Euro traded close to the lowest level in two weeks versus the Dollar yesterday as the sustained decline in oil prices continued and the drop in Euro-zone industrial orders emphasised the deterioration in the outlook for the economy.
Orders plummeted three times initial estimates in the revised numbers for May as a stronger currency and a slump in domestic demand weighs heavily on business confidence.
Elsewhere, retail sales in France and Italy were also below expectations and therefore the tone of the German Ifo sentiment index is expected to point to further downside risks to growth.
Although the Dollar initially declined against the Pound following the release of the BoE minutes, the U.S currency consolidated back below $2.00 by the close of trading last night and also registered sharp gains versus the majority of the major currencies.
The revival in Dollar sentiment can be attributed to speculation that the U.S government rescue plan for Fannie Mae and Freddie moved a step closer to congressional passage while oil prices continued to tumble through $125 a barrel.
The renewed sense of stability surrounding the financial industry combined with speculation that oil prices have peaked sparked rumours that the Federal Reserve will raise interest rates by September.
The Pound took advantage of broad Euro weakness yesterday to breach back above the 1.2600 barrier by the close of trading last night but the UK currency fell back towards the 1.9900 level versus the Dollar amid a string of economic and geo-political factors.
Crude oil prices fell more than $3 a barrel in New York and to the lowest in six weeks amid forecasts that a tropical storm headed for the Gulf of Mexico will miss oil installations.
The price of oil fell below $126 a barrel after reaching a record high of $147.27 just 11 days ago and the 15% drop in prices in such a short period of time may indicate that the upward trend in prices has peaked.
Elsewhere, the Pound failed to find any support as a distinct lack of UK economic indicators meant that the market’s attention was briefly fixed on comments from Alistair Darling.
In a televised interview, the Chancellor said that the fallout from a global credit crunch is having a “far more profound effect” on the economy than had been previously anticipated. Darling’s tenure as Finance Minister has coincided with the worst slump in housing and the steepest rise in living costs in a decade.
The tone of his statement indicates that UK policy makers are becoming increasingly pessimistic about the outlook for growth and the focus this morning will fall on the release of the minutes from the Bank of England’s last policy meeting.
At least one member of the MPC would have elected to lower interest rates but the statement from Andrew Sentence last week showed that rising inflation may warrant an increase in borrowing costs.
The voting pattern of the committee will be of particular significance to economists and if one more member joined Blanchflower in electing for a cut in UK interest rates then the Pound may decline further against the Dollar after closing under the support at 1.9944 last night.
The Dollar rallied against the majors yesterday, rising by the most in two weeks versus the Euro after the U.S Treasury Secretary again voiced his support for the greenback in a speech in New York.
Paulson expressed confidence that Congress will agree to proposals designed to “boost confidence” in Fannie Mae and Freddie Mac, two of the largest sources of U.S mortgage financing.
The Dollar has fallen to a record low against the Euro this month and breached the $2.00 level versus the Pound on concerns that two of America’s biggest financial institutions, which guarantee almost of the $12 trillion in U.S home loans outstanding, would fail to survive the worst housing slump in nearly 20-years.
Nevertheless, Paulson remains defiant that the U.S government will pass the bill and he reiterated the importance of a strong dollar, which also found support as the Philadelphia Fed President, Charles Plosser, said that the Reserve Bank should raise interest rates to combat inflation.
The Dollar subsequently rallied 0.9% versus the Euro and also enjoyed a strong intraday move against the Pound after oil prices retreated to a six-year low and the U.S currency may extend its advance today, particularly if commodities continue to tumble.
The Pound fell to a low of 1.9909 against the Dollar yesterday, before bouncing back later in the session, after an industry report from Rightmove Plc showed that UK house prices dropped by the most since the survey began in 2002.
The average price for a home in Britain fell an annual 2% this month to £235,219 as prices fell a further 1.8% on the month and tighter lending conditions led to an increased number of unsold homes swamping the market.
A separate report also indicated that house prices will decline 10% in 2008 and a further 6% next year as the looming threat of a recession means that Bank’s will impose even tighter lending restrictions while consumer prices are likely to breach 4.0% amid record high fuel costs.
The Pound also slumped against the Euro for a second day in succession as Bank of England policy maker David Blanchflower, who has previously voted for a more aggressive easing of UK interest rates, said that the Bank has little option but to reduce borrowing costs.
In an interview in the Guardian newspaper, Blanchflower, acknowledged the recent spate of negative reports surrounding the UK economy and said that “we are going into a recession and we are probably in one right now”.
It is not at all surprising that Blanchflower advocates for a reduction in rates and the minutes of the Bank’s last policy meeting will probably reflect his dovish outlook for the economy. The views of David Blanchflower contrast will a recent statement by another member of the Central Bank’s monetary policy committee, Andrew Sentence, who said that rising inflation was the primary threat to the economy.
The Dollar fell against the Euro yesterday and also failed to hold to earlier gains made against the Pound as index of leading economic indicators forecast that the U.S economy will continue to struggle over the next 3-6 months.
The Conference Board’s index fell a further 0.1% in June after a 0.2% drop the previous month as rising unemployment claims and U.S stock market declines erode confidence while falling equity prices means that the economy still stands on the brink of a recession.
Elsewhere, the Dollar also came under pressure after crude oil prices rose the lowest level in six weeks amid reports that a tropical storm threatened production in the Gulf of Mexico and Iran again resisted demands for a suspension in their nuclear research program.
Following on from last week, the Pound has been susceptible to the increased level of volatility in stock and commodity markets while the looming threat of a UK recession has caused some division with the Bank of England’s monetary policy committee.
The price of oil may have peaked above $147 a barrel as U.S inventories dramatically increased beyond initial forecasts in June but the subsequent impact on inflation will probably see consumer prices breach 4.0% over the coming month.
The rising threat of inflation is posing a problem for the BoE as policy makers are forced to weigh up the escalating risks to price stability against a slowdown in the UK economy.
The Pound rallied above $2.00 last week but failed to sustain that momentum as a 15% drop in oil prices helped boost Dollar sentiment while the focus should switch to UK fundamentals this week amid a packed calendar of market moving data.
The advanced estimate of gross domestic product in the second quarter is expected to show a further deterioration in UK economic growth. The report may show that the economy grew by just 0.2% in the three months to June while a separate report on retail sales is expected to confirm that consumer spending declined significantly in June, falling 2.5% after a surprising gain in May.
Nevertheless, the focus will inevitably fall on the release of the minutes from the Bank of England’s last policy meeting and although policy makers left rates unchanged, the voting pattern of the nine-member committee could lead to speculation of a rate change.
Despite suggestions that the Euro-zone economy contracted in the second quarter, the relentless threat of inflation continues to dominate the ECB’s monetary policy and that has continued to support the Euro as the single currency consolidates near the all time record high versus the Dollar.
A spate of recent negative economic reports has pointed to further downside risks to growth while manufacturers are struggling to cope with rising prices as business and consumer confidence dwindles while borrowing costs increase.
The ECB’s governing council members elected to lift interest rates by 25 basis points earlier this month in an attempt to rein inflation, which has remained at the highest level in 16-years and food and fuel prices rise to a record high.
The focus this week will fall on the IFO business sentiment index in Germany where confidence is expected to deteriorate in correlation with the ZEW survey of investor and analyst expectations released earlier this month.
A sharp drop in exports and production points to an overall slowdown in business activity but a separate government report is expected to show that producer price inflation in Europe’s largest economy increased at the fastest pace in 26-years last month.
The Dollar rebounded against most of the major currencies on Friday after falling to a fresh record low versus the Euro earlier in the week as the turmoil surrounding financial markets eased and crude oil retreated 15% in just 4-days.
The renewed appetite for the Dollar was also helped amid speculation that U.S investment banks will withstand the credit crisis while the Treasury Secretary, Henry Paulson, is confident that the government will pass proposals to shore up confidence in Fannie Mae and Freddie Mac.
Data Released 21st July
U.K 00:01 Rightmove House Prices (July) U.S 15:00 Leading Indicators (June)
The Pound struggled to remain above the crucial $2.00 level for a second consecutive day against the Dollar while the UK currency also retreated back towards 1.2600 versus the Euro last night amid contradictory comments from the Bank of England.
Consumer prices rose above preliminary forecasts in June and to the highest level in over a decade but MPC member, Dale, said in an interview yesterday that a slowing economy would help rein in inflation.
In a separate statement, BoE policy maker Andrew Sentence said that he was “particularly struck” by the jump in prices and even considered voting for an increase in UK interest rates last month.
The nine member monetary policy committee face a difficult balancing act in the months ahead as record high food and fuel costs stoke price expectations while policy makers attempt to shield the economy from a recession.
The minutes from the Bank’s last policy meeting are released next week and although rates were left unchanged at 5.0% this month, the voting pattern of the committee will be of particular interest on the future outlook for policy.
The Euro remained largely unchanged against the majors yesterday as a hawkish rhetoric from the ECB President, Jean-Claude Trichet, prevented the single from succumbing to a recovery in Dollar sentiment.
The Chairman of the Central Bank maintained his hawkish stance on monetary policy despite the escalating fears of a worldwide recession and said that policy makers can’t afford to ignore the second round effects of higher inflation.
In short, Trichet acknowledges the risks to economic growth but strongly believes that maintaining the risks to price stability is a far more pressing concern and is determined to bring inflation back from the highest level in over 16-years.
The ECB elected to raise interest to 4.25% earlier this month and the tone of yesterday’s statement could mean that further increases are to come while the Euro may find further support this morning as German producer prices are expected to show that a measure of inflation accelerated to 6.5% year-on-year in June.
The renewed optimism surrounding the Dollar is hardly surprising given that oil prices have retreated close to $18 a barrel or 12% since Monday’s high of $147.67, helping lift U.S stocks which had previously plummeted towards a record low.
The escalating tensions in the Middle East raised concerns over supply and helped push energy prices to new record highs but a surprising increase in U.S inventories has prompted speculation that oil may have peaked.
Lower prices would enhance consumer sentiment and improve business confidence while also helping alleviate the already persistent inflationary concerns and investors are optimistic that prices have topped as the fall this week is in line with the degree of the prior corrections.
In terms of economic data, the Dollar remained little changed after U.S housing starts, building permits and weekly jobless claims were all better than expected by manufacturing the Philadelphia region failed to rebound in June.
The Pound failed to consolidate above the $2.00 barrier against the Dollar yesterday but the UK currency took advantage of broad Euro weakness to close above 1.2600 last night despite a sharp increase in UK unemployment.
Claims for jobless benefits climbed for a fifth straight month in June and by the most since the end of the last recession in 1992 as the slump in the economy forced homebuilders and Banks to cut jobs and stop hiring.
The number of Britons out of work and claiming unemployment benefits increased 15,500 from May, rising well above initial forecasts and a softening in the labour market may exacerbate the slowdown in the economy and lead to a contraction in growth.
The Pound declined against the Dollar in the aftermath of the report as the Bank of England fights to bring inflation back towards target but an interest rate increase at this stage would weigh on consumer sentiment and cripple the housing market.
The collapse of the U.S subprime mortgage market has cost financial institutions worldwide an estimated £208 billion in losses and writedowns, which has seen 94,000 job losses in the banking sector alone.
In addition, a recent report from two of the UK’s biggest homebuilders, Redrow Plc and Bovis Homes Group Plc, both said that they will slash their workforces by 40% with 4,000 jobs cuts since the start of July.
The Euro declined against both the Pound and the Dollar yesterday as the harmonised index of European consumer prices showed that inflation accelerated at the fastest pace in over 16-years in June and matched earlier estimates published on the 30th June.
The report from the European Union showed that the annual pace of inflation rose above 3.7% year-on-year last month led by a 19% surge in Transport fuels while the cost of heating oil increased 53% and had the biggest upward impact on inflation.
The European Central Bank raised interest rates by 25 basis points earlier this month and to the highest level in seven years at 4.25% as policy makers struggle to rein in consumer prices while the scope to continue monetary tightening may be limited as the economy stumbles towards contraction.
The Dollar has been susceptible to a number of economic and geopolitical issues in recent weeks and the U.S currency enjoyed a sharp intraday move against the Pound yesterday after U.S stocks rallied and oil prices tumbled.
Crude oil for delivery in August fell over $4 a barrel on the session after a report from the Energy Department showed that U.S inventories unexpectedly increased as supplies rose to 296.9 million barrels last week.
In terms of economic data, the Dollar also found some support after U.S consumer prices jumped 5% over the past year, the biggest increase since 1991, as record high food and fuel costs saw the cost of living rise 1.1% from May to record the second largest increase since 1982.
The report provides an indication of the problems facing the U.S economy but with inflation accelerating beyond initial forecasts, the Federal Reserve face a difficult balancing act in steering the economy away from a recession while keeping a lid on consumer prices.
Data Released 17th July
U.S 13:30 Initial Jobless Claims (w/e 12th July) U.S 13:30 Housing Starts (June) U.S 15:00 Philly Fed Business Index (July)
Daily Foreign Exchange Rate Forecast – The Pound slumped below $1.54 against the U.S Dollar yesterday
by Adam Solomon
Sterling / Euro and US Dollar
The Pound slumped below $1.54 against the U.S Dollar yesterday, while UK government bonds rose, after further losses in global stocks boosted demand for fixed-income and the Dollar as a haven. The Pound stayed lower against the Dollar, as a report from the Bank of England showed that... Read more
Foreign Exchange Daily Forecast – The Pound rallied against the Euro yesterday
by Adam Solomon
Sterling / Euro and US Dollar
The Pound rallied against the Euro yesterday, rising above 1.2150, while the UK currency also made modest gains versus the majority of the 16 most actively traded currencies, with the exception of the U.S Dollar, which is gaining on risk sentiment. Sterling gained for a third straight day... Read more
Canadian Dollar Foreign Exchange Rate Forecast – Canadian second quarter growth figures due out today
by Jon Beddell
Foreign Currency Market Update – GBP / CAD Update
A slight upward revision to the UK’s second quarter GDP figures to 1.2% did little to lift Sterling last week as investors focus on the longer term impact of the government’s austerity measures. On the other side of the Atlantic the US suffered a... Read more
South African Rand Foreign Exchage Forecast – The market enjoys a relatively stable period
by Jon Beddell
Foreign Currency Market Update – GBP / ZAR Update
It’s not surprising to see this market enjoying a relatively stable period. The dominant theme in the markets right now is that there are two major currencies in play. The US dollar…and everything else! As evidence of a new economic slowdown continues... Read more
Registered Company Name: Tor Currency Exchange Limited. Registered in England & Wales, Number: 5193147.
Tor Currency Exchange Ltd is authorised by the Financial Services Authority under the Payment Service Regulations 2009
(FRN 517320) for the provision of payment services.
HM Revenue & Customs Certificate of Registration for Money Laundering Regulation, Number: 12191606.
