Sterling has surged against the Dollar with a better than expected UK mortgage approvals figure this morning sending the Pound upwards. The US currency has also become more subdued whilst markets await the Governor of the Federal Reserve, Ben Bernanke, to give his semi-annual press conference later today on the outlook for the US economy. It is widely expected that he will adopt a cautious tone when discussing the state of the recovery, particularly in comparison to other global central banks who are preparing for interest rate rises. This may therefore be a very good day to speak to your broker about Sterling rates against the US Dollar if you have a transfer of this nature to make.
Pound Sterling – UK Markets
The Pound has moved up against both the Dollar and the Euro - in particular edging up to highs of the interbank 1.63 level against the US Dollar following positive figures on mortgage approvals.
The amount of mortgage approvals accelerated to 45.723 thousand in January which was a much better figure than the expected drop to 43.000. The housing market has been one of the Achilles’ heels’ areas of the UK economy so the news has registered an instant reaction by giving Sterling a boost and could provide more evidence that the economy could withstand an interest rate rise.
PMI manufacturing data this morning came in as expected at a reading of 61.5 – this will relieve anxiety in some quarters where a lower reading was expected.
US Dollar – US Markets
The US Dollar has weakened against the Euro, Pound and Yen before the Federal Reserve Chairman Ben Bernanke testifies later today. The press conference will be closely watched by markets as it covers the Federal Reserve’s outlook for the economy and therefore has the possibility of bringing volatility to the currency depending on how positive or not the outlook is.
The currency is at around a three and a half month low as most are predicting that Bernanke’s tone will be cautious, particularly in comparison to other Central Banks where rising inflation and interest rate rises are being hotly discussed.
Euro – European Markets
The Euro has fallen against the gaining Pound but pushed higher against the US Dollar ahead of this week’s European Central Bank meeting on Thursday. This follows a wave of comments from Central Bank officials about inflationary pressures creating increased speculation for a rate rise sooner than originally thought – although it is most likely rates will be held at 1 percent this time.
This is further reinforced by the fact that this morning saw European CPI inflation data come in again at 2.4 percent and the unemployment rate slightly improve to a level of 9.9 percent.
Other Currencies – Highlights
The Canadian Dollar is making headlines again, rising to the highest level since November 2007 against the US Dollar following a GDP report yesterday. The report showed that GDP growth accelerated much more than expected to 3.3 percent above a predicted 2.9 percent.
This is due to a surge in exports and the Bank of Canada interest rate decision is due later today. Although today’s decision is expected to result in a rate hold, a rate rise is expected come in the second quarter of 2011.
The US Dollar Slips on Disappointing Data
Markets Indecisive Ahead of Critical Events
US Treasury Yield Curve Inversion Triggers Flight-to-Safety