Will US GDP Figures Bring Another Surprise This Afternoon?

The month draws to a close with crucial US GDP figures due this afternoon. Markets will be watching to check the levels of growth from one of the world’s largest economies and paying particular attention following the surprise rise in UK GDP figures earlier this week which caused a rise in Sterling. It is therefore a volatile end to another volatile month. Looking back at the extreme movements in the Sterling Euro pairing of the past two months, at the start of September 2010 £100,000 would have bought €122,660 but by the end of October that same £100,000 would only achieve €111.810 - that’s a €10,850 difference in just one month. In real terms, a property purchase in Euros for example is now 9% more expensive in October than September. To find out how to protect yourself from this volatility speak to your currency broker today.

Pound Sterling – UK Markets

Sterling made more ground against the Euro yesterday to close at €1.1489, a gain of 0.2% on the day. Some of the gains were erased in overnight market activity. In early European trading, the rally has continued and the Pound is currently trading at €1.1504 (at 11:00 GMT). Sterling gained against the US Dollar, for most of the day yesterday, but tailed off somewhat in overnight trading. At the close, the Pound was worth $1.5920. Currently, £1 will buy $1.5887 (at 11:00 GMT). British Prime Minister, David Cameron, gained support for his move to oppose a 5.9% increase in the EU budget. Ten nations, including France and Germany, agreed with Cameron’s position that the increase should be pegged back to 2.9% - which would mean a rise in the UK contribution of £435 million.

US Dollar – US Markets

This afternoon sees the important economic release of quarterly US GDP figures for the third quarter. Similar UK GDP figures on Tuesday which came in well above target bought about an instant swing in the rates causing Sterling to gain over a percent on other major currencies so markets will be keen to see whether the US figures may also be above target or cause any similar movement for the Dollar. A rate of growth of 1.9 percent is expected – whether the actual figures over-achieve or disappoint, they will certainly form an integral part of the Federal Reserve’s meeting on stimulus measures next week. For most of the day yesterday, the Dollar made losses against both the Pound and the Euro. However the Dollar rebounded in overnight trading to recoup most of the losses. At the close yesterday, the Dollar was buying €0.7217, a loss of 0.4%. In early European trading, the current rate is €0.7240 (at 11:00 GMT). It has continued to weaken against the Yen. A little brighter news has shown that the level of new, first time unemployment claimants has dropped to its lowest level for three months.

Euro – European Markets

The Euro is falling against both Sterling and the US Dollar in early European trading. The current values are that £1 is worth €1.1504 and €1 is worth $1.3809 (at 11:00 GMT). The European Union has agreed moves which are designed to prevent a future Euro crisis such as that triggered by Greece’s problems this spring. The new rules would see a permanent emergency fund established; more scrutiny over national budgets and the provision of sanctions against delinquent nations.

Other Currencies – Highlights

Growth has slowed in Asia’s fourth largest economy, South Korea. The decline has been blamed on a faltering export market which has been hard hit by the recent strength of the South Korean Won. Moves by the South Korean’s to depreciate their currency have sparked controversy with Japan; a nation faced with the same problems. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.