Traders continued to sell sterling yesterday, pushing the UK currency down to a five-month low against the dollar, eventually closing at 1.5797. The pound lost ground after an economics and business report forecast that sterling could fall as low as $1.40 against the dollar. The report found that interest rates in the UK were likely to remain at record lows for some time and would remain at just 2.0% until 2014, which would put the country’s yield well behind other major economies. Traders also continued to speculate that the Bank of England might increase the value of its quantitative easing policy beyond the current £175bn, in stark contrast to the prospect of similar special stimulus measures being wound down in other economies.
Posts Tagged ‘Dollar’
Sterling loses further ground to the dollar on specualtion of a further extension of QE
Posted by admin on October 13th, 2009
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Investors were cautious yesterday ahead of an ECB rate decision, but the euro has rebounded this morning
Posted by admin on October 8th, 2009
The euro relinquished some of its recent gains against the greenback yesterday, with investors on the defensive ahead of the ECB rate decision today. A broadly stronger dollar was the currency of choice yesterday as investors trimmed “riskier” positions in favour of the haven currency as equities slipped into the red, easing risk appetite.The dollar also benefited after a US official said raising interest rates would not derail the US economic recovery. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy.Additionally analysts noted that the greenback was being supported by speculation that the dollar’s decline may have been too fast to sustain.In trading this morning, the greenback has come under pressure after Australian employment data reinforced demand for higher-yielding assets. The ECB are widely expected to announce today at 12:45BST that interest rates in the eurozone will remain at a record low of 1.0%, though the tone of the accompanying statement is likely to reflect growing optimism over the state of economic recovery in the region.
Stong servies data and rallying equities were unable to buoy a weak pound yesterday, enabling the dollar to creep up
Posted by admin on October 6th, 2009
The pound continued to edge downward, undermined by speculation ahead of the MPC meeting later this week. Data revealed that Britain’s services sector grew more strongly than expected in September, expanding at its fastest rate for two years, quelling fears over the UK recovery following weak PMI data in the manufacturing and construction industries last week. However, the data failed to buoy confidence in the pound significantly with investors remaining wary of taking positions in UK assets ahead of the MPC statement this week. Additionally, business activity in the US non-manufacturing sector expanded in September, against market expectations of standstill, which supported dollar buying.
Weak US data sapped demand for the aussie yesterday, enabling the pound to gain
Posted by admin on October 2nd, 2009
The pound rebounded strongly yesterday, gaining over two cents, or 1.3%, as a sharp rise in risk aversion in the market, dulled demand for the ‘riskier’ currency. Both unemployment claims in the US and manufacturing data posted worse-than-expected figures, raising slight concerns over the rate of recovery in the world’s largest economy, and weakening demand for the higher yielding aussie. The negative US data was reflected in global stocks, which also took a steep downturn, with major indices loosing around two percent, which further reduced dollar selling, enabling the GBP/AUD price to rise.
Euro advanced yesterday but its progress has been halted today in the wake of dovish euro speculation
Posted by admin on October 1st, 2009
The euro pushed higher against the dollar yesterday in choppy trading, even as disappointing US economic data weakened stocks.The single currency made strong gains yesterday morning, supported by the results of the ECB cash tender offer. The volume of bids was lower than expected, which implied that financial conditions in the eurozone were improving and there may be less need for the ECB to inject money into the market. Additionally, German unemployment fell again in September and even after seasonal adjustments, the number of jobless fell by 12,000, resulting in an overall dip in the unemployment rate to 8.2%, which buoyed demand for the single currency.
Weak US data yesterday afternoon strengthened dollar appeal, trimming sterling’s gains
Posted by admin on October 1st, 2009
A mixed bag of data in the US prevented the pound from sustaining early gains yesterday, eventually closing just 0.1% up on the day at $1.5980. The pound shot up against the dollar in early trading, posting an intra-day high of 1.6123, after an industry report showed consumer confidence in the U.K. jumped by the most in 14 years. But the greenback trimmed its losses after the ADP Non-farms employment data revealed a worse-than-expected change in US employment which eased risk appetite and returned investors to the haven currency. The sharp dip, was initially offset as more data revealed an upward revision in the US GDP figure to just a 0.7% contraction from a previous -1.0%, and beating forecasts of a downward revision.
More positive investor sentiment returned to the UK yesterday, supporting a slight pound recovery
Posted by admin on September 30th, 2009
Sterling reversed a four day slide against the dollar yesterday, supported by positive economic data that included another upward revision of the 2nd quarter GDP figure. The final gross domestic product figure showed that UK growth contracted by 0.6% between April and June, a narrower fall than the previous estimate of a 0.7% contraction. The revision is almost entirely due to stronger estimates of construction output than previously forecast, according to analysts. Sales volumes at U.K. retailers also bounced back more than expected to their strongest level for five months in September and are expected to remain steady in October.
Sterling weakness drags it down below 1.60 following King’s comments
Posted by admin on September 25th, 2009
The pound slid 1.7% against the greenback yesterday as momentum to dump the pound snowballed following comments from King that lent his support to a weak currency. Sterling was at a two and a half month low against the dollar after comments from Mervyn King left FX markets in no doubt the Bank of England was comfortable with a weaker pound.A meeting set up between the BoE and London-based economists to clarify policy also worried investors who maintained their bearish sentiment toward the pound, pushing it lower.An easing of risk appetite added support to the dollar after data revealed a decline in US existing home sales from the previous month and undershooting forecasts.Additionally, as the US markets came online, equity markets took a turn into the red, which supported demand for the haven currency, and brought the price to a close of $1.6064.In trading this morning, sterling has tumbled to a four month low against the dollar as a break of the 1.60 level triggered a wave of stop loss sales.
The dollar climbed yesterday and has continued to do so strongly in trading this morning
Posted by admin on September 24th, 2009
Having rallied strongly in the morning, the pound relinquished its gains as equities fell, with the pair closing marginally down at 1.6339. In European trading hours, the pound continued to advance after the Bank sounded a relatively bullish note on the economy, saying there had been a “number of developments during the month with positive implications.”There was also no sign that the Bank discussed cutting the interest rate it pays on commercial bank deposits in an effort to boost lending in the UK economy, which Mr. King had spoke of last week, adding downward pressure to the pound.However, the pound lost around 0.75% of its value in the evening as the surprise fall in equities quelled demand for riskier assets.Additionally, the Fed statement in the evening had sounded a more hawkish tone than some had expected, despite confirming that rates would remain at near zero for an “extended time,” which also cautioned traders against over selling the dollar.
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