Sterling remains range-bound this morning, trading at 1.1942 against the Euro at 10am. This compares to an average price of 1.2042 for September and 1.1668 for the year so far.
The USD has slightly weakened against a basket of currencies including Sterling over the past three days and was trading at 1.5714 at 10am this morning. When looking at the bigger picture, the yearly high against GBP is 1.6456 and the low 1.4228. Depending on whether you are buying or selling there are strategies you can use to work the market to your favour so it’s worth speaking to your broker to find out more.
Pound Sterling – UK Markets
UK retail sales figures were released yesterday showing a fall of 0.5% in August. This decrease appears to be from lower food, fuel, and household goods sales and was the first decline since the VAT increase last January. The main contradiction to this was non-store retailing such as Internet shopping which rose by 1.6%.
The recovery of Sterling over the past six months has been well received by our clients buying goods, homes or services from overseas but is not such great news for UK exporters. UK CBI industrial trends survey came out soft in September because the strengthening exchange rate makes it more expensive for exports; this is the first decline in three months.
The overall declines add to the sense that the UK economy is not out of the woods just yet. There is still mixed data giving hope and with other major currencies also facing difficult times currency buyers would do well to speak to their broker to formulate a strategy, even if you have no immediate requirement.
US Dollar – US Markets
Looking for positive figures, initial jobless claims fell by 3k to 453k last week. Claims are now down 54k from their August peak however; the US Census Bureau says that one in seven Americans was living in poverty in 2009 with the level of working-age poor the highest since the 1960s.
US producer prices figures were announced as being up 0.4% in August with a 7.5% jump in petrol prices being the main driver.
This adds to the evidence that the US economy is weak but probably holding its head above water.
Euro – European Markets
July Eurozone trade deficit figures came out yesterday at €0.2bn. That is the third deficit in a row after persistent surplus from early 2009 until April this year. Both imports and exports fell which is a clear indication that austerity measures are being observed across the board.
Other Currencies – Highlights
The US Treasury Secretary, Timothy Geithner has stated that he feels the Yuan is significantly undervalued.
Unlike most other major currencies, China does not allow its currency to fluctuate freely according to market demand and intervenes to keep it low. Because of this China has been accused by the US and others of devaluing its currency to make its exports artificially cheap.
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Dollar Weakens as Fed Rate Cut in July Seems Imminent