Pound Won’t Be Beaten

The Pound is fending off assaults from all angles. Negative housing data and Mervyn’s King’s attempts to rein back the UK economic outlook with a serious dose of pragmatism haven’t prevented Sterling from hitting yet further highs against the US Dollar.

Pound Sterling – UK Markets

The Pound has now hit its highest levels against the US Dollar since February. It is also heading for its biggest monthly climb against the Yen since March. The currency has however lost ground on the Euro this morning as the balance with the single currency remains volatile. GBP has predominantly remained buoyant despite Bank of England Governor Mervyn King’s attempt to calm down focus on the recent positive UK Q2 GDP figures. King suggested that it was misguided to raise hopes too much for the economic outlook based simply on these figures. This emerged during yesterday’s meeting between the Bank of England Policy Committee and the Treasury Select Committee. King’s fellow committee member Andrew Sentence however continued in his attempts to suggest that inflation needs curbing via an interest rate rise countering King’s sentiments. The Pound has also shaken off more news that has added to the evidence of a slowing housing market. Nationwide Building Society gave details of UK house prices falling in 0.5 percent from June to July on the back of Government cuts deterring potential buyers. Bank of England data has also revealed that mortgage approvals fell to a four month low in June.

US Dollar – US Markets

The US recovery has been further marred by durable goods statistics which have highlighted that orders fell by 1 percent in June. This was accompanied by a cautionary report from the Federal Reserve causing the Dollar to fall against most other major currencies. Markets will be watching tomorrow’s Q2 US GDP figures and the weekly jobless numbers later today.

Euro – European Markets

The Euro has seen some fresh positive data today making gains on the Pound and the US Dollar. The economic outlook for the region is getting better. German unemployment has declined for a thirteenth month in a row as exports have increased; executive and consumer sentiment has risen in June; and companies such as the German Deutsche Bank AG and French Louis Vouitton SA have far over-achieved against analysts earnings estimates.

Other Currencies – Highlights

The Australian Dollar has fallen against the US Dollar following weak Q2 consumer price data that has lowered the likelihood of another interest rate rise. The Reserve Bank of New Zealand on the other hand has raised interest rates by 0.25 percent. This has initially caused the currency to slide back due to investment moves as the rise was largely anticipated. However the rise also was accompanied by the news that any further rises will be slower due to the ongoing fragility of the recovery thereby also dampening the outlook somewhat. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.