More Sterling Negativity

Unfortunately, Sterling is facing what now appears to be the age old story of being knocked down just as we pick up pace. In summary a view across the markets at present is not a case of who makes the correct steps going forward, but more to do with who struggles the least. This will dictate Sterling’s strength (or lack of) going forward this year. Pound Sterling Whilst it is nothing of great significance, public sector net borrowing has come in worse than expected. The Office for National Statistics states that a fall in tax receipts are to blame for this unexpected data. Lets also bear in mind the cuts have being made across the board by the government and may take some time to kick in. However, on a rather more predictable note, Sterling declined against all 16 of its major peers as Moody’s Investors Service announced it may lower the credit ratings of 14 banks and building societies in the UK. Dollar The US will later today reveal figures on new home sales which is often a good indication of both consumer confidence and the overall state of the economy. With figures expected to be slightly higher than previous, indications suggest that today could be a volatile ride for the US Dollar. With higher energy prices last month curbing consumer spending and growth, Federal Reserve Bank of New York president William Dudley has suggested that keeping borrowing costs low and the yield curves steep will aid the economic recovery. In contrast a solution to increasing debt levels is still being discussed. Euro Germany, Europe’s apparent shoulder to lean on has once again come up with the goods this morning. GDP figures and IFO expectations have both come in as or above expected. Subsequently, the single currency has cancelled out some of the losses seen over the last few days. However, whilst we have been echoing these thoughts for some time now, it appears even Germany are unable to prop up the euro as the continents sovereign debt crisis worsens in tandem with industrial expansion. The Greek government have proposed 6 billion euros worth of budget cuts in a last ditch attempt to gain extra monetary support. The next week will be a very telling time in what forecasters propose for the euro. Other Currencies – Highlights My own personal safe haven favorite, the Swiss Franc is expected to climb to a record high against the dollar as charts point to a clear upwards trend. With little on the horizon to suggest otherwise, the franc looks to be moving in the right direction. The commodity based Australian and New Zealand Dollars have snapped back after two days of losses as a rally in commodities and stocks bolstered demand for higher yielding assets. It is very tricky to predict commodity currencies at present because of the sheer volatility of the markets but with movements as sharp as they are, I suggest speaking to your broker in an attempt to catch an upward spike.