The picture has become yet more bleak for Sterling today with the currency now at around a five month low against the Euro. This morning saw an array of economic data come out in the UK including the UK budget deficit which has now widened to 10.488 billion Pounds. GDP figures from the fourth quarter of last year were confirmed as showing slowing growth at a rate of -0.5 percent. Following dire retail sales figures last week and more news on dropping house prices yesterday, Sterling is finding itself in a very vulnerable position at present with little obvious on the horizon to help boost the currency. We offer protective strategies against currency volatility so feel free to register an enquiry or speak to your broker; working with us is free so even if you are just inquisitive its worth a call.
Pound Sterling – UK Markets
The Pound has dropped further against the Euro since yesterday. It managed to pick up from its lowest point against the Dollar but is still seriously deflated at present showing some of the lowest levels seen in months.
The story could have been even worse this morning as there was some expectation that fourth quarter GDP figures would be revised to come in even lower. The currency has been relatively stable therefore as in the event they came in at the same level of -0.5 percent. The key test for Sterling will now be the GDP figures for the first quarter of 2011 in a month where growth will really need to be seen to shore up Sterling and restore faith in the economy.
The widening budget deficit as revealed this morning will also be an issue. On a positive, mortgage approval data this morning has revealed growth in this area.
US Dollar – US Markets
The Dollar has moved down against the Euro since yesterday as speculation over a European interest rate rise reaches fever pitch. Rising oil prices are also expected to continue to benefit the Euro rather than the Dollar.
This shows that some of the hype dissipated yesterday over comments made by policy makers in the US suggesting interest rate hikes and the withdrawal of monetary stimulus are a growing possibility. Consumer confidence later today is expected to come in slightly lower for March.
Euro – European Markets
Despite the array of growing speculation over the possibility of a Portuguese bailout, the Euro has appreciated against the Dollar and Sterling as the outlook for an interest rate hike in early April dominates markets following Trichet’s comments yesterday.
ECB President Trichet’s speech cemented the anti-inflation stance and fuelled speculation that an interest rate rise will occur next month. The currency is strengthening therefore despite the fact that it is becoming more and more likely that Portugal will require some EU bailout funds following the downgrading by Standard and Poor’s on some of its banks yesterday. There are also concerns that Irish banks will soon be needing more recue funds.
Tomorrow morning sees consumer, economic and industrial confidence in the EU.
Other Currencies – Highlights
Rising oil prices have once again sent the Canadian Dollar higher as concerns over the disruption of oil supplies in Libya continue to have an impact on prices.
The currency has also strengthened in response to the rising US Dollar, with better economic data in the US such as in the area of consumer spending, helping to also pushing the Canadian Dollar higher.
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