Weekly € rates and comments – week commencing 27th April 2009

Sterling suffered a rather poor week on the markets thanks to an array of poor data and publications released throughout last week. Improvements from the prior week's trading which had seen sterling hit multi-week-highs against the euro and US$ unwound gradually as confidence in the pound dwindled. Last Wednesday's budget announcement from the Chancellor, the release of the Bank of England meeting minutes and jobless figures for March combined to weaken sterling with weaker-than-expected UK GDP data compounding the losses on Friday. We also learnt last week the level of UK government debt we as a nation will be taking on over the next few years. The figures are based on what some say are over-optimistic predictions and therefore could well be substantially worse than forecast. Despite the poor news and data sterling performance showed a level of resilience not seen in previous months and this should be as a positive for the medium term.  On Friday we see the release of data released on UK manufacturing and mortgage approvals. Improvements are expected in both with the former helped by new orders and sterling weakness.

 

The euro sits at €1.104/£1 interbank. Euro zone economic data was very thin on the ground last week. The lack of significant news as well as the poor performance by sterling and the US$ flattered the euro, eventually closing roughly 2% higher against both currencies. The US equity markets have enjoyed six consecutive weeks of gains and this optimism has been supported by some encouraging housing market data, but as before, in the current market positive US economic data has encouraged risk-taking and resulted in a weaker US$. There is a mixture of economic data out this week so it will be interesting to see how the disparate parts of the euro zone are doing.

Weekly € rates and comments – week commencing 20th April 2009

The equity rally which started in the previous weeks trading continued last week and helped sterling extend its recent gains against most major currencies. Though sterling's value on the markets is still mainly influenced by risk-appetite/aversion, increased confidence in the UK and global financial sector has clearly helped. This week we have the budget to look forward to. Not sure what the Chancellor can do apart from starting the process to reduce public expenditure. We also have a raft of economic data released this week; inflation data on Tuesday, employment data on Wednesday and retails sales on Friday. So by the end of the week we will have a clearer picture as to how the UK economy is progressing and if there are any "green shoots" of recovery and if the outlook for sterling is any the brighter.

 

 

The euro has suffered during the month of April so far and sits at €1.124/£1 interbank. With an uncertain picture of how the European Central Bank will tackle the mounting issues within its vast and diverse economy the euro has weakened despite a positive rally in European equities markets. Last weeks figures showing that eurozone industrial production fell by almost 20% year on year highlights how difficult conditions are. There are also rumours of a difference of opinion within the ranks of the ECB on monetary policy which may well mean that these decisions from the ECB are far from being made. Euro inflation data released last Wednesday was much as expected but a narrowing of the Euro-Zone Trade-deficit gave the euro a rare positive for the week.

Weekly € rates and comments – week commencing 14th April 2009

With the main focus of last week a rather predictable decision on interest rates from the Bank of England (BoE) sterling enjoyed a rather more stable period on the markets than events in previous weeks had allowed. There was no direct mention of further 'unconventional' monetary policy, such as quantitive easing, in the announcement and so despite a brief wobble ahead of the release sterling maintained its levels and looked to finish the week unscathed. There was little other UK economic data of note and so investor confidence and risk aversion continued to strongly influence sterling's position on the market, closing the shortened week roughly 1% higher against the euro and fractionally down against the US$.

 

The Euro sits at €1.119/£1 inter bank and weathered a flurry of weaker-than-expected data releases in the early part of this week as Euro-Investor confidence, Retail sales and GDP figures all disappointed. Stronger Industrial production and German trade balance figures did help the euro to stop any significant rot but by the end of last week the euro was down against both sterling and the US$. Important European Consumer Price Index figures will be released this week and given the importance of inflation in the current recession this news will be pivotal to whether the European Central Bank will be able to resist making the cut in rates so widely expected from their last meeting.

Weekly € rates and comments – week commencing 6th April 2009

The G20 summit in London last week had been touted during the run-up as perhaps the pivotal moment for the major powers dealing with the global recession and how we all may survive the ensuing fall-out. So far we have learnt as much about the divisions within certain camps at the meeting as we have about the actions and process for moving forward and limiting this damage. Last week  started positively and continued through the week and sterling's value improved to see increases of about 3% against the euro and  5% on the US$. The Bank of England meets this week and is expected to keep UK interest rates on hold. We also have important economic data released here, in Euro land and in the US so it could be a volatile week for exchange rates. . However the week has started positively for sterling and so we wait to see whether this is yet another false dawn for sterling.

 

The euro has lost ground against sterling and sits at €1.103/£1 inter bank. The European Central Bank (ECB) surprised the markets last Thursday by cutting interest rates down by only 0.25% rather than the 0.5% widely anticipated by most parties. The euro interest rate, now at 1.25%, is at a record low in the short history single currency and in a statement shortly after the decision, JC Trichet, the president of the ECB, refused to rule out a further cut next month. With no other significant economic data for the euro released last week the euro gained marginally against the Swiss Franc and the US$ thanks to momentum carried from previous weeks' trading.