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
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
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Pound Sterling Extends Slide as PM May Suffers Another Defeat
British Pound Slides on Soft Inflation Data
The US Dollar Weakens Amid Market Correction Ahead of Key Data