GBP Haunted by U.K living standards threatening to fall.

With prices climbing and the UK standard of living decreasing, Friday the 13th could not come at a worse possible time. The Institute of Fiscal Studies has confirmed this stating that as inflation surpasses any increase in paychecks it shouldn’t be long before we all start to feel the pinch. More so than we are already…

Pound Sterling – UK Markets

Yesterdays industrial and manufacturing figures failed to have an effect on the market for more than a couple of minutes suggesting a real possibility the inflation report has urged the BoE to, at the very least, discuss the possibility of an interest rate rise sooner rather than later. Although sterling held its ground for the most part it failed to stabilise yesterday afternoon with estimated 3 Month GDP figures coming in at only 0.3 percent compared with the last 0.7 percent consensus. The report is considered highly reliable and influential to the UK monetary policy. All is relatively quiet on the GBP front today with no data due out in the coming hours. It will be a chance to see if the sterling is able to hold its own without the help or hindrance from any significant data

US Dollar – US Markets

With retail sales doing very little in April the markets began to focus on the continuing jobless claims. With the data coming in higher than expected, an estimated 3.756M currently on the unemployment list, the USD began its decent and lost the majority of the gains it saw in the previous few days. Consumer Price today is expected to be higher than March, given this will exclude volatile products such as energy prices and food, it will be a good indicator of the improvements or struggles to come across the pond. The Federal Reserve Chairman, who usually steers clear of discussing anything in the political arena, used his monthly meeting to weigh into the battle ground last night. Using the opportunity to urge congress to raise debt limit as it was risky of those to use it ‘as a bargaining chip’. He claimed it would cause harsh instability in the finance markets and a preventable climb in interest rates. He also took yesterdays speech as an opportunity to show appreciation to Mexico who have managed, in the last two years, to curtail inflation. He reminded his listeners that both countries affluence is so closely linked that the US has, in a round about way, benefited from the Mexican policy maker’s hard work.

Euro – European Markets

Germany’s GDP figures came in better than expected this morning and is partly responsible for the Euro resuming its climb against sterling, already gaining 0.85 percent on sterling since yesterdays high. A recent survey gave 4/5 odds Greece will ultimately fail to pay off its debt so it is no wonder the general feel is that this will be short lived. The same survey suggests that Portugal and Ireland will probably follow suit the outlook for these countries may continue to decline. It is thought if they do renege on their debt major restructuring for all will be essential causing havoc amongst the 17 Euro countries.

Other Currencies – Highlights

In South Africa yesterday an unchanged interest rate decision was overshadowed by the outlook on inflation. The central bank left their rates unchanged to help spur a recovering economy while trying to stave off the pressures from price increases in oil and food costs. These pressures have resulted in inflation rising above the 3-6 percent target range. The decision was made unanimously and interest rates remain at a 30 year low. Despite this the governor of SA central bank has labeled the inflation situation temporary and doesn’t find it a good enough excuse to raise interest rates.