Sterling continues to surprise
This week negative data in the UK has led the pound lower against the single currency in the longest losing streak since January. In a week that has been relatively light for UK data, the good news is that house prices rose, leaping the most in over two years to gain 1.6% on the month and business confidence improved, reaching 4.8 in June.
The bad news for sterling has been the record budget deficit and the comparative euro strength which has pushed bond prices to record lows and kept sterling sentiment weak. Sterling exchange rates fell to a multi-month low against the single currency, and are currently trading around 1.13. Though economists are predicting a market correction, when this will occur is uncertain and for now, having up to the minute market information is essential for euro/sterling transfer.
In the US, markets opened optimistically this week as president Obama re-appointed Ben Bernanke for a second term as chairman of the Federal Reserve. Bernanke is widely credited for bailing the US economy out of the financial crisis and this move was regarded as positive by markets sending the US dollar higher against its currency partners. Consumer confidence also rose to a three-month high, while durable goods orders improved 4.9% on the month, slightly below market expectations.
US GDP figures also released this week confirmed the US economy contracted -1% in the second quarter, while jobless claims continue to rise. Economists are predicting the US will return to growth in the third quarter of 2009 while unemployment may rise as high as 10%.
The euro has been the major winner in terms of currency exchange rates this week, driven higher by strong data from the German economy. After unexpectedly ending their recession in the second quarter, Germany's consumer confidence reached a three-year high, while the IFO business climate and expectations exceeded market estimates. This is likely to help lift the rest of the eurozone and the UK out of recession and euro exchange rates climbed to over 0.88 versus the pound, while holding ground at 1.42 on the US dollar.
In other currencies, the Australian and New Zealand dollars received an initial boost after the reappointment of Bernanke, and another following news that Australian business investment rose 3.3% in the second quarter. The Japanese yen has retained its strength this week, as uncertain equity markets in China, as well as falling export levels, inflation and the pending election in Japan boosted demand for the safe haven.
So while it appears we are on a shaky road to recovery, the good news has not quite extended to the UK economy just yet. Currency exchange rates remain subject to market volatility and to get the best exchange rate, it is worth having a personal broker monitor the markets on your behalf. At Currency Solutions, our personal currency brokers provide you with up to the minute information and can watch the markets on your behalf, helping you save time and money with currency transfer.
Have a good weekend.