Sterling hits 2 month low vs Euro

Wednesday 29th June 2011
Good morning. Sterling has hit a 2 month low vs the Euro this morning, as the single currency has gained significant support ahead of the Greek vote on austerity measures. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1116


• GBP/USD 1.6008


• GBP/AUD 1.5133


• GBP/NZD 1.9590


• GBP/CAD 1.5680


• GBP/CHF 1.3289


• GBP/ZAR 10.941


• GBP/JPY 129.65


• GBP/DKK 8.2875


• GBP/NOK 8.6686


• EUR/USD 1.4396

Sterling hits 8 week low vs Euro

The pound is at a 2 month low vs the Euro this morning, and the lowest in over a year against a currency basket. This is because the Bank of England have renewed the possibility of further Quantitative Easing and data showing very slow growth in the UK.

We saw figures yesterday showing that the economy only grew by 0.5% in the first quarter, and annual growth has also been revised down. The UK data added to the view that UK interest rates are likely to stay at their record low 0.5 percent well into next year. Also some BoE policymakers, speaking in parliamentary testimony, mentioned the possibility of more quantitative easing if the economy stayed fragile.

More Quantitative easing signals worries over the economy and Sterling has suffered as a result. Policymakers' opinions differed, however. David Miles said more asset purchases could be an option for the future, while BoE Deputy Governor Paul Tucker said there was not a uniform move towards more QE. The lack of consensus just goes to show how fragile things are at the moment.

Today's Data

UK data today is in the form of Consumer Credit, Mortgage Approvals, Consumer Confidence and Money Supply. Recent UK data has been very gloomy, and further poor data could push Sterling lower. From the Eurozone we have measures of economic, industrial and consumer confidence all of which could affect GBP/EUR rates.

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Pound gains on BoE decision to hold QE

5th November 2010
Good morning. Sterling jumped to a 9 month high against the US Dollar and gained versus the euro yesterday, buoyed by a Bank of England decision to keep rates unchanged and its asset-purchasing programme on hold as we predicted yesterday. Rates at 08:30am are as follows:

• GBP/EUR 1.1403
• GBP/USD 1.6203
• GBP/AUD 1.5941
• GBP/NZD 2.0423
• GBP/CAD 1.6243
• GBP/CHF 1.5520
• GBP/ZAR 10.992
• GBP/JPY 130.72
• GBP/HUF 310.74
• EUR/USD 1.4207

Bank of England decision

The Bank of England has held UK interest rates at a record low and decided not to pump more money into the economy via quantitative easing (QE). The decision to make no change to policy comes after recent figures on the economy showed good growth.

Gross domestic product (GDP) grew at 0.8% in the third quarter - better than expected - and recent manufacturing data was also upbeat. Until these reports some experts had expected there would be more QE. As there was none, the pound gained against other currencies throughout the day.

Pound vs US Dollar

In contrast the US earlier in the weak decided to pump $600bn into the economy, and the result was a very weak US Dollar. Combined with the UK decision yesterday, rates for Sterling to US Dollar are at their highest for 9 months. If you need to buy USD, contact us today to see how our rates compare with your bank.

Pound vs Euro

Rates remain around €1.14 which is much better than the €1.11 we saw a few weeks ago. The rate is at this level due to the BoE decision and also better EU data that has strengthened the Euro. We expect rates for GBP/EUR to remain volatile however, as any further poor UK data will likely push the pound lower.

A second round of quantitative easing in the new year remains a possibility if the UK economy falters as the government implements sharp cuts in public spending in an attempt to reduce high levels of debt. The BoE are very uncertain about where to go next, and this uncertainty is likely to weigh on the pound in the coming weeks and months.

Today's data

The UK and EU release more inflation data, so expect GBP/EUR to be choppy today. Retail Sales are also released from the EU along with German Factory orders. US unemployment and Non-Farm payrolls are the main release today however, and we expect volatility in GBP/USD.

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