United States Dollar: Well, a fairly subdued start to the week for cable was met with a little more volatility yesterday. When I say little, I mean large. The UK GDP figures were the reason for this as a forecast figure of 0.5 % was met with exactly that, but in minus. This figure was very poor and diminishes any view that interest rates will be hiked by the BoE near term. Sterling suffered on the back of this and fell 245 pips against the Greenback. Vince Cable, Business Secretary, tried to soften the blow before the release commenting that Q4 was a “pretty bad quarter”, but the GBP/USD dip from 1.6000 down to 1.5937 wasn”t much softening. The big release did the main damage and brought the currency pair down to a low of 1.5755. PSCNR added to Pound’s woes coming in worse than expected. PSNB falling would normally have offered some relief, but under the circumstance, it fell under the radar. Mervyn King’s hawkish comments did however offer minimal relief last night. Sterling briefly jumping above 1.5800, but has fallen off since. Cable opens this morning at 1.5775.
– We expect a range today in the GBP/USD rate of 1.5660 to 1.5890
Euro: The single currency continued its strong performance of recent as Germany continued to prove the health of it economy. GfK German consumer climate 0.2 % higher than the forecast and shows consumers are still putting their hands in their pockets. French consumer spending also rose on its month on month figures. EUR/USD remained range bound however, despite numerous attempts to break 1.3700 the closest it got was 1.3690. This big figure may have had some reluctance of being broke as many fears Ireland will have to go back to the EU/IMF for further aid. EUR/USD opens this morning at 1.3670. The Euro did however break 0.8600 versus the Pound. The extremely poor UK GDP figure was the main driver behind the single currencies gains. Sterling lost 120 pips when Euro reached the peak of its advances. Sterling has seen little in the way of recovering during a quite Asian session last night and opens at 1.1540 versus the Euro. Other news also having a play on Euro movement yesterday, ECBs Nowotny commented that interest rates wont be decided during the first half of this year and the EFSF launched a successful bond sale with Japan purchasing an unsurprising 20 %.
– We expect a range today in the GBP/EUR rate of 1.1460 to 1.1610
Aussie and Kiwi Dollars: Sterling was the big loser yesterday and there were no surprises in its movement against the AUD and NZD. Not to repeat myself once more, but the UK GDP figures were the reason for the Pounds demise. The Pound prior to this release had been slowly climbing against the antipodean currencies. In the past 30 days we have seen GBP/AUD as low as 1.5200, but the Pounds gradual advance saw it a 1000 pips higher at 1.6200 in the last few days. Well, just short of this figure. GBP/NZD similarly was as low as 2.0000 and as high as 2.1100. A quiet Asian session overnight is partly down to Australia celebrating Australia Day, a national bank holiday, and has seen little in the way of Pound recovering. GBP/AUD slumps to 1.5820 to begin the day and GBP/NZD dismally sits at 2.0540.
– We expect a range today in the GBP/AUD rate of 1.5760 to 1.5950
– We expect a range today in the GBP/NZD rate of 2.0420 to 2.0700
