Pound news:
UK GDP in line with expectations at 0.3%, a very important figure in relation to Sterling performance. So far today Sterling is very much on the back foot against the dollar, session lows coming in at $1.4277 with current trading levels not too far away at $1.4295. Trading has been, and is likely to continue within ranges, the $1.42 level should be supported and $1.4450 proving to be a formidable resistance level.
Drastic budget cuts have been announced to the tune of £6.5billion so far, this has helped Sterling slightly in that the markets have renewed faith that the new government can deal with our huge deficit.
Against the euro trading has been relatively calm with levels remaining very much in the €1.16 area. Today’s high is €1.1691 with the low being €1.1651 and the current buy price is €1.1684. Britain may be looking to address its financial issues, however, the overbearing problems in the eurozone will continue to weigh heavily on Sterling. Any gains versus the dollar and euro are likely to be short term rallies. As risk aversion continues Sterling will not be featuring too high on investors choice of asset.
US Dollar news:
The dollar starts this morning where it left off yesterday; making gains on both the euro and Sterling. At 16:30 London time Sterling was approaching session highs and looking as if it may push through $1.45, however $1.4450 proved to be the resistance level as it slid from $1.4441 to $1.4296 as of this morning, the dollar currently up 0.91% against the Pound for the day so far.
Such are the debt similarities between the euro and Pound that the two currencies often mirror one another versus the dollar. Today is no different as a slight rally from the euro has been reversed, the euro now testing session lows versus the dollar at $1.2243.
A major boost for the dollar comes in the form of continued eurozone woes and recently the dollar has reaffirmed its safe haven status. The Canadian dollar continues to fall against the US dollar, now trading at 0.9293. Similarly, the commodity lead currencies are struggling to make any gains versus the dollar whatsoever, Australian Dollar, CAD and New Zealand Dollar all down over 1% on the dollar today.
Yesterdays existing home sales came in better than expected which would have provided support to the dollar. Today sees CB consumer confidence which surveys consumer views on current and future economic conditions. Positive numbers here will give the Greenback more steam for a climb ahead.
April U.S. Existing Home Sales Rose More Than Forecast:
Euro news:
The euro is very much the centre of attention, and has been for some time, as a Spanish bank required rescuing over the weekend in similar circumstances to that of Northern Rock. News of the bank rescue has simply fuelled the fire on a eurozone collapse with contagion now a real threat to the growth of the region. “Looking ahead, we suspect contagion risks from the European sovereign debt crisis will remain front-brain for markets,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “With negative momentum firmly ingrained, we wouldn’t be surprised to see the euro re-test recent lows around $1.22 in coming sessions.”
Italian retail sales came in slightly better than expected this morning but this data is unlikely to have much of an effect on the euro. The market is very much on edge about the eurozone but we have not quite stepped into a full blown crisis just yet. Global markets are starting to falter on the grounds that the failure to manage the euro debt crisis will spark a global recession. As such the euro remains on a downward trend versus the dollar but is holding firm on the Pound, EUR/GBP only 0.15% down on the day so far.
CajaSur Seizure Marks Change for Spains Ailing Banks:
Quote of the Day
“Those who say it cannot be done should not interfere with those of us who are doing it.” – S. Hickman
May 26th, 2010 at 11:17 am
if england is currently more stable than the euro, how is it the euro has not dropped lower, agaainst £sterling?
May 26th, 2010 at 1:20 pm
The Pound is more stable compared with the euro relatively speaking. Against the euro our debt problems are not quite so bad (although not great, it has to be said) but if you look at U.K finances versus other nations we are clearly heavily indebted, hence the substantial weakness against the U.S dollar.
One rather pessimistic way of looking at it is the euro and pound are two sinking ships, it is simply a matter of which sinks fastest and furthest.