Good morning and welcome to today’s foreign exchange market commentary on Thursday, the 15th of March.
Markets remained range bound yesterday due to lack of economic data. Sterling had a mixed day yesterday, rallying against majority of its global peers in the morning before weaker than expected unemployment data reversed the gains.
Among the day’s important developments, ratings agency Fitch warned about a possible downgrade of British economy after Moody’s made similar observations a month ago. Fitch said the country had a very limited fiscal space to absorb further economic shocks before revising outlook to negative from stable. British pound has been supported by a flight of capital as investors continued to choose safe-have gilts over crisis ridden Europe. The latest warning by Fitch risks a slowdown and limits finance minister George Osborne’s options just a week ahead of Britain’s budget.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.2001
GBP/US$ – 1.5669
GBP/CHF – 1.4544
GBP/CAN$ – 1.5554
GBP/AUS$ – 1.4938
GBP/ZAR – 12.019
GBP/JPY – 131.18
GBP/HKD – 12.1585
GBP/NZD – 1.9280
GBP/SEK – 10.722
EURO: The single currency weakened against the greenback as data from Europe remains feeble. Inflation remained high as energy prices continue to drive up cost of living. Industrial productions grew at a slower rate than predicted, thus weighing down the euro further. The EUR/USD pair closed lower at 1.010 on Wednesday, but has retraced some of yesterday’s losses to open at 1.3060 this morning. Sterling remained range-bound yesterday and the GBP/EUR pair opened at 1.990 this morning.
USD: Sterling weakened against the USD yesterday with the GBP/USD pair changing hands for 1.5672 compared with 1.5683 a day before. Though current account gap widened to $124 billion and import prices dropped by 0.4 percent in Feb., USD managed to march ahead due to the positive outcome of bank stress-tests. The dollar index, a barometer of the greenback’s strength, rose to 80.596 from 80.231 the day before. The GBP/USD pair opens at 1.5647 this morning.
