Sterling fell against the US dollar and euro yesterday as investors took profits following last week’s highs. Last week was a bumper week for the pound as inflation figures heightened expectations of an earlier than expected interest rate hike by the Bank of England. However, negative comments from Adam Posen on Friday and a downbeat article in the Daily Telegraph cast doubts over the possibility of any change in monetary policy. The Telegraph argued that any interest rate hike could punish the economy and push the recovery into a period of stagflation. Today sees the first estimate of UK GDP for the 4th Quarter and analysts are expecting the harsh weather to have dented economic activity. This week also sees the Bank of England’s minutes from their last meeting so call in for a live exchange rate.
In the euro zone, the euro fell from a 2 month high against the US dollar as worries over political instability in Ireland dented the outlook for the region. The euro hit the highest level against the US dollar since November on Sunday as talk over inflation in the region helped the currency hit $1.3648/1 but that was soon lost as worries over the stability of Ireland’s bailout plan caused the currency to drop. Monthly industrial orders slipped in the region also – out today there is German consumer confidence data so call in now for a live exchange rate.
In the USA, it was a quiet day for data in the region and the US dollar took its lead from other currencies. It is an interesting week ahead, with President Barack Obama’s State of the Union address tonight and the Federal Reserve’s interest rate decision tomorrow. Ensure you speak to one of the team to avoid the market moving against you.
Elsewhere, the Canadian dollar fell against the majority of counterparts following an announcement to increase oil production by Saudi Arabian Oil minister Ali al-Naimi that saw the price of crude oil drop. Canda kept interest rates on hold last week given the Canadian dollar’s strength and any further rate rises will be ‘carefully considered’.
EURO/GBP – 1.1672
US$/GBP – 1.5955
CHF/GBP – 1.5151
CAN$/GBP – 1.5834
AUS$/GBP – 1.5997
ZAR/GBP – 11.1843
JPY/GBP – 131.53
HKD/GBP – 12.4320
NZD/GBP – 2.0833
SEK/GBP – 10.4333
US$/EURO – 1.3666
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