US Dollar:
The Dollar is up against Sterling this morning as negative sentiment regarding the pound continued following Mervyn King’s speech yesterday. However, continuing on from the news that a bailout is being put together to help Greek finances, the Euro has rallied against the Dollar, up 0.2% this morning at 1.376.
Recent data from the US suggests the Dollar may strengthen as figures point to 3% growth this year with unemployment down after reaching a high of 10.1%. News of improved growth in the US and the hawkish sentiment in Bernanke’s speech further cemented the Dollar as a safe haven for those adverse to risk. GBP/USD 1.556 EUR/USD 1.375
Pound:
Sterling after initially rising early yesterday morning was soon put back in it’s place by Mervyn King (Bank of England governor) who delivered the quarterly inflation report revising down its forecasts for economic recovery at the same time as playing down any chance of a double dip recession. The market interpreted the report and comments as somewhat dovish indicating longer periods of ultra-low interest rates and quite possibly more QE (money printing) to come, which automatically wiped out recent gains by sterling and confidence in the UK currency.
Sterling has seen further weakness this morning against the Euro driven by prospects of a bailout for heavily-indebted Greece which in recent weeks has undermined the Euro. And helped kept the sterling/euro rate higher. The market now awaits UK CPI (inflation data) due out on Tuesday of next week. There is no major UK data due today.
Euro:
The strength of the Euro continues to be led by news that a bailout is imminent. Tim Condon, foreign exchange strategist with ING, said the Euro could rebound further if a bailout for Greece is confirmed, possibly back to mid-January levels of around $1.45. The Euro is up against Sterling as news of another round of bond buying by the British Government may be required in order to restart the economy. Interestingly, the U.K made it clear that they wish to distance themselves from the Euro crisis suggesting a lack of confidence in Euro Zone fiscal policy as well as an immediate need to focus upon their own budget deficit issues. GBP/EUR 1.1312
Quote of the Day
“If you always do what interests you, at least one person is pleased.” – Katharine Hepburn
