Pound:
Sterling is trading a little lower this morning against the Euro and around a similar level vs. the USD. Investors awaiting UK retail sales were disappointed this morning when today’s data came in under the expected pick up of 1.3% in the high street for December. The pound before this data which came out at 9.30am had initially risen against the USD after the US currency was undermined by US president Obama threatening Wall street banks with new rules to prevent risk taking.
Despite some moves down for the pound today against the Euro by around 0.35%, this week has been a more fruitful one for sterling having taken full advantage of growth worries in Europe and problems with Greek finances in particular. The UK currency has also been aided by strong UK inflation and housing data, increasing prospects of interest rate rises and the economy showing a positive growth reading for Q4 2009.
In other news the market shrugged off comments by Bank of England Deputy Governor Paul Tucker, who said on Thursday more needed to be done to regulate “shadow banks” and warned regulatory arbitrage remained a risk to the fragile financial system.
Concerns remain over the state of UK public sector finances but after recent data in various European countries, the UK is clearly not the only country for investors to be concerned about. I’m off dancing to some 1940’s to 1970’s soul music on Saturday selected by Keb Darge and the legendary Paul Weller, have a good one!
US Dollar:
The Dollar was down against the Euro and Sterling this morning as new banking regulations in the U.S led to speculation of a negative effect on the economy there. The plan aims to limit the size of megabanks, and force institutions to choose between commercial banking and proprietary trading. The ICE Dollar Index, which tracks the value of the Dollar against a trade weighted basket of currencies, measured the Dollar down to 78.20 this morning from 78.395 last night on the back of the U.S proposal for regulation.
The Dollar remains buoyed by poor economic data and fiscal debt concerns in the Euro zone and now a drop in the U.K FTSE that hold back Sterling and Euro from further gains on the Dollar. Poor U.K retail sales data released this morning prevented Sterling from continuing its recent gains on the U.S currency, with the Euro edging back on the Dollar after President Obama’s new banking plan. GBP/USD 1.6221, EUR/USD 1.4152
Euro:
The Euro received a short term boost against Sterling this morning after worse than expected U.K retail sales figures were released, whilst also gaining ground on the Dollar after proposals for new U.S banking regulations led to traders fearing the news would be bad for the U.S economy. The outlook on the Euro still remains bearish however, with the soaring cost of insuring Greek debt now being mirrored by rising prices for Portuguese and Spanish credit default swaps as markets start to worry about the deficit problems faced by those countries too.
Global risk appetite has also been under pressure of late, with the Euro one of the losers in currencies that traders feel most safe investing in. If the Euro zone currency’s union continues to be shaken with debt concerns, the Euro may be under further pressure, although the global nature of the recession doesn’t rule out other countries’ currencies feeling the affect of negative sentiment in their region. GBP/EUR 1.1455, EUR/USD 1.4152.
Quote of the Day
“Luck is when preparation meets opportunity.” – Paul Fargis
