Questions Over UK Growth

Whilst the Euro has found some temporary relief, with Japan and the European Central Bank purchasing bonds, the Pound has had a mixed day as growth prospects have been questioned. The British Chamber of Commerce have released their predictions for the fourth quarter of 2010 expecting a decline in economic growth to 0.4-0.5 percent from the official 0.7 percent figure of the previous quarter. Should these predictions be realized the Pound may show vulnerability. Currently however, the rate against the Euro is holding at around a four month high at around £€1.20. Get in touch to find out how you can secure this rate for any Sterling to Euro upcoming transfers.

Pound Sterling – UK Markets

The Pound hit a four month high against the Euro but has experienced a mixed twenty-four hours against the Dollar. It lost some ground due to poor house price figures yesterday, followed by a very cautious outlook report from the British Chamber of Commerce today, that has estimated slowing growth in the fourth quarter of 2010. The British Chamber of Commerce estimates that the economy expanded by 0.4-0.5 percent in October-December, slowing down from the 0.7 percent official figure for July-September. Although the report labeled a new recession as ‘unlikely’ it highlighted the fragile nature of the recovery, saying that the services sector was responsible for much reduced output. The report has dampened sentiment that the UK economy was getting back on its feet coming on the same day as the British Retail Consortium highlighted falling UK retail sales last month due to adverse weather conditions. The news comes two days before the next Bank of England monetary policy meeting. Fortunately for Sterling, Euro weakness continues to dominate market movements, but the outlook for the UK economy looks a little more fragile.

US Dollar – US Markets

The Dollar has started the week quietly with not much in the way of data releases, instead responding to the events in other nations. The Dollar has gained on the Pound over the last day but is now lower against the Euro. The currency is not seeing the same momentum which kept it strengthening throughout last week when expectations for jobs data was soaring; although, consumer confidence is expected to come in higher this afternoon. We may also see more Dollar strengthening should the Euro tumble in the second half of the week as the bond auctions take place.

Euro – European Markets

The Euro experienced some good news as Japan followed China’s pledge to buy Euro-zone bonds in a show of support and the European Central Bank themselves have also bought some Portuguese bonds. The Euro strengthened against some if its counterparts in particular the Australian and New Zealand Dollars. However, fears still remain about how things may turn in the second half of this week, in particular depending on the Portuguese bond auction tomorrow. Despite denials, there is still a widespread belief that France and Germany are putting pressure on Portugal to accept a recue package, which would be likely to bring some more weakness to the Euro.

Other Currencies – Highlights

An economic data release from Australia has revealed that the trade surplus dipped to 1.925 billion in November from 2.62 billion in October. With the tragic floods in Queensland worsening, and the currency losing strength as the economic impact intensifies, this latest piece of news from last year will not help. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.