Pound stays fragile ahead of Bank of England meeting
Currency exchange rates are little changed this morning, with the pound remaining weak ahead of the Bank of England interest rate decision later in the week. US automobile giant Ford has announced near USD1 billion worth of profits for the third quarter, while manufacturing sectors in both the UK and the eurozone expanded in October.
Pound Sterling – UK Markets
Sterling has slipped further against its major currency partners in early trading this morning, as investors remain wary over the Bank of England interest rate decision later in the week. The pound is currently valued at around 1.63 against the US dollar and 1.10 against the euro.
The pound is suffering due to speculation that the Bank of England will vote to expand QE by a further GBP25 billion at their meeting on Thursday. Yesterday the UK manufacturing sector received a boost with the news that the PMI expanded into positive territory for the month of October, reaching 53.7 after 49.5 last month. Today the UK construction sector PMI is due and this, along with US factory orders could cause some volatility for the pound.
US Dollar – US Markets
Currency rates for the US dollar are marginally lower this morning, after pending home sales data came in weaker than expected yesterday. This morning the greenback has dipped against its major currency partners sinking against the yen and euro, while rising against the Australian dollar and pound.
US automobile giant Ford has announced profits of nearly USD1 billion in the 3 months to September, after cost saving measures and the “cash for clunkers” initiative helped to revitalize the automobile industry. This is compared with a loss of USD161 million for the same period the previous year. Factory orders and consumer confidence figures for the US are due today.
Euro – European Markets
Euro currency rates are relatively unchanged this morning, rising to 1.47 against the US dollar and 0.90 versus the pound. The euro has also gained against its European and Asian currency partners, with the exception of the New Zealand dollar and Swedish kronor.
Yesterday PMI figures for the manufacturing sector came in at 50.7 for October, rising above the 50 mark that indicates expansion. Last week eurozone unemployment rose to 9.7% as nagging doubts persist over the stability of the eurozone recovery. Today is light for euro data with the PMI for services and the producer price index due on Thursday.
Other Currencies – Highlights
The Australian Reserve Bank voted to raise interest rates by 0.25% to 3.5% as expected overnight, making Australia the first nation to raise interest rates for the second time this year. The accompanying speech suggested a “prudent” approach to further rate rises, and this led the Australian dollar to dip throughout the day's trading, falling to 90.15 US cents.
The South African rand has suffered its largest intra day loss against the US dollar after an electronic fault on the Tokyo stock exchange triggered stop loss orders to sell the currency. The rand fell around 6% against the US dollar over the course of the day, after rising over 20% this year as the 7% interest rates made the rand attractive for dollar carry trades.