The UK Deserves a Party
The UK Deserves a Party
On the day of the Currency Solutions summer party the UK finally has reason to celebrate with the release of some promising GDP figures. Prior to our company shin-dig this evening, our brokers here will be on call to answer any queries you have about strength in the UK economy.
Pound Sterling – UK Markets
Q2 GDP figures were released at GMT 09:30 and whilst it was expected that the results would be strong, they were not expected to come in as high as they did. Figures showed that the UK economy grew by 1.1% in the second quarter of the year which almost doubled initial predictions of 0.6%.
Almost instantly off the back of this the Pound rallied through the 1.54 mark against the US Dollar, smashing the week’s high of 1.5350. We are sure to see some Dollars being bought throughout the day as the US economy continues to struggle.
At GMT 10:15 the GBP/USD rate was 1.5409 and the GBP/EUR rate was 1.1904.
US Dollar – US Markets
With little else occurring in the markets after yesterday’s shortcomings, Hurricane Bonnie has taken centre stage. The tropical storm has forced ships off the Gulf of Mexico away from the site of the disastrous BP oil spill. As if President Obama has not already got enough on his plate with the recent sacking of agriculture official Shirley Sherrod, he is now faced with the prospect of a two week relief-well drilling suspension.
That aside, recent poor data in the US coupled with a boost in the European economy had forced the BNP Paribas banking group to reverse its forecast that the Dollar would soon reach parity with the Euro. This comes off the back of a statement that described the US economy as ‘unusually uncertain’.
Euro– European Markets
On the eve of the much anticipated European stress tests, the Euro was given a generous push off the back of some positive data. Both manufacturing growth and consumer confidence exceeded expectations for July. However, the Euro has fallen this morning over concerns that the stress test results will reveal heavy loan losses at European banks. With the single currency falling against 10 of its 16 most traded counterparts perhaps our cynical view on the nature of the tests yesterday have proved overly premature.
Whilst the stress test results are not expected until 18:00 Brussels time, some sources believe that there will be credible leaks throughout the day but these are unlikely to make any significant difference to rates.
At GMT 10:17 the EUR/USD rate was 1.2945.
Other Currencies – Highlights
Japanese officials have continued to spell out their concerns over the strengthening Yen. It is suspected that they may step into the currency markets in an attempt to protect the nation’s exporters. It would be the first time in six years that the government has had to step in and have set a rough benchmark YEN/USD rate of 85 at which point this would occur.
On a slightly different note, the Hungarian Forint dropped for the first time in four days against the Euro after Moody’s Investors Service placed Hungary’s Baa1 local and foreign currency government bond ratings on review.
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