United States Dollar: Sterling has started to recover its losses against the US Dollar. Tuesday saw the release of UK GDP figures, which was a far cry from the forecast 0.5 % and subsequently saw Cable fall down to 1.5755. The MPC meeting minutes however began the Pounds recovery yesterday with Sentance being joined by Weale in voting for an interest rate increase of 25 bps. The vote fell at 7 – 2 in favour of keeping interest rates on hold. Votes on QE saw little change from previous meetings with Posen holding the single vote for a 50 bln increase. The minutes also showed that an increase in interest rates was considering for January. This news along with Weale’s recent change of heart was taken as a positive and the Pound rose back above 1.5800 to a high of 1.5864 on the back of this. Early China buying lent a hand to Cable breaking back through 1.5800. The US session found the UK minutes positive and Sterling continued its rise higher during. The FOMC left rates unchanged in what was a fairly upbeat statement, stating that the economy has slightly improved but unemployment still remains a head scratcher. Not much change overall. US new homes sales did show change however and sales jumped 17.5 %. A quiet Asian session overnight saw Sterling maintain its rise and GBP/USD opens this morning at 1.5930. All eyes on US data later today with unemployment claims the pick of the bunch.
– We expect a range today in the GBP/USD rate of 1.5860 to 1.6010
Euro: Germany kept up its impressive run of releases yesterday with import prices coming in stronger than the forecast figure. Yesterday also saw the Irish government win its first vote on the financial bill with 80 votes to 78. This announcement gave the single currency enough of a lift to break the big figure 1.3700 versus the US Dollar after many attempts to do so this week. The Euro has remained above this big figure this morning partly on the risk-on effect of the jump in US new home sales. The Euro however declined against the Pound. As mentioned above, the MPC minutes helped Sterling’s recovery with talks again of interest rates. Sterling, which had been sat at 0.8665 / 1.1540 at the start of Wednesday, now resides above 1.1600 and opens this morning at 1.1640 versus the Euro.
– We expect a range today in the GBP/EUR rate of 1.1580 to 1.1750
Aussie and Kiwi Dollars: The Aussie and Kiwi couldn’t do much in the way of fighting the Pounds gains across the board yesterday. Having said this, the NZ official cash rate being held at 3 % did stunt the Pounds advances. The reserve bank of New Zealand followed the rate announcement stating inflation is “comfortably” within its target range and further rate increases, although likely, will be dependent on a robust recovery. Sterling had risen to 2.0750 versus the Kiwi, but on the back of this release the currency pair fell back below 2.0600. GBP/NZD opens this morning at 2.0677. Sterling only saw gains during yesterday’s sessions and opens this morning at 1.6057 versus the Australian Dollar.
– We expect a range today in the GBP/AUD rate of 1.5950 to 1.6180
– We expect a range today in the GBP/NZD rate of 2.0610 to 2.0820
