Shopping Until We Drop…Just Not Buying Houses

The Pound grew yesterday as Bank of England policy member Andrew Sentence reiterated his view that a rate rise is needed in stark contrast to the views from the Bank of England Governor. This morning saw booming retail figures from the UK for the month of January at 1.9 percent above the forecast of 0.6 percent, which will ease doubts over fears that the VAT increase would have a large scale effect. This only saw a short- lived boost to the Pound however which then leveled off as mortgage approvals for the same month came in below target at 41, 000. The Swiss Franc is particularly strong currently so if you have Francs to exchange into another currency now could be a good time to check rates with your broker.

Pound Sterling – UK Markets

The Pound gained on both the Euro and the Dollar yesterday as the never–ending saga over the question of interest rates took another digression. Andrew Sentence, the Bank of England policy member who has long been outspoken on the need for a rate rise, reiterated his views with particular reference to his opposition to the Bank of England Governor’s downbeat views provided in Wednesday’s inflation report. Reports this morning caused some movement as the Pound initially jumped in response to growing retail figures for January but then flattened out as mortgage approval figures came in for January showing a contraction down to 41,000.

US Dollar – US Markets

The Dollar has fallen as good regional manufacturing data was overshadowed by a disappointing increase in initial unemployment claims by 25, 000 reported in the weekly figures. CPI inflation figures for the US did not help boost by the currency by coming in on target at a monthly increase of 0.4 percent taking the year on year inflation figure to 1.6 percent. The Swiss Franc also continued to win out as the safe-haven currency of choice rather than the US Dollar in response to the tensions in the Middle East.

Euro – European Markets

The Euro lost out to the Pound but gained on the weaker Dollar yesterday as expectations mounted for an improving index of sentiment among factory executives in France and growing factory orders in Italy. Concerns have also risen from the fact that emergency overnight borrowing from the European Central Bank remained very high shooting up to 16 billion Euros causing some to wonder a Euro zone bank could be in trouble although the European Central Bank gives no break down of the figures so this is unclear. The Swiss Franc has maintained its two week highs as tensions in the middle East boosted safe haven flows.

Other Currencies – Highlights

The Canadian Dollar reached its strongest level since March 2008 against the US Dollar with crude oil prices reaching nearly a two year high on concerns that ships could be disrupted by tension in the Middle East. There is also mounting anticipation that the Bank of Canada may signal an interest rate rise from the 1 percent level at the start of March which is forecast to boost the currency further. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.