Pound to Euro & Pound to US Dollar Forecast

Good Morning. Sterling fell to its weakest in 10 days against the US Dollar yesterday, and unwound some of the previous session's gains versus the euro, weighed down by banking sector concerns and worries over UK fiscal health in the run up to the pre budget report this week. At 08:30am rates are as follows:

• GBP/EUR 1.1045
• GBP/USD 1.6368
• GBP/AUD 1.7962
• GBP/NZD 2.2950
• GBP/CAD 1.7228
• GBP/JPY 145.66
• GBP/ZAR 12.246
• EUR/USD 1.4819

Euro
Following a very quiet week in terms of movement much focus will now be placed on the Bank Of England Interest Rate decision on Thursday of this week to help determine the future direction of the GBP/EUR cross.

Any further quantitative easing would be viewed as Sterling negative by investors while an announcement that this scheme has reached and end would almost certainly bode well for the struggling Pound. If you have any upcoming requirement to either buy or sell Euros it would be well worth paying close attention to this release and any accompanying statements.

Last week The European Central Bank, (ECB) announced that they will be leaving interest rates on hold at 1% as had been widely forecast. However, they did announce plans to withdraw some of their existing stimulus measures, bringing to an end cheap fixed-rate loans to banks which had been introduced to encourage lending.

This has fueled speculation that the ECB may look to hike interest rates sooner than previously thought, although in accompanying statements key officials played this down which has prevented any significant Euro gains at least for the moment.

In other news, Euro zone inflation rose to the first positive reading for five months, should this continue it will only add to the speculation building on the ECB to increase interest rates, a luxury that The Bank of England can only dream as they battle to pull the UK economy out of recession.

Elsewhere, in a relatively quiet week for data, focus will be on German Industrial figures on Tuesday and inflation data on Wednesday.

All things considered it is difficult to see where Sterling is going to get any additional strength from making it vital for anyone with a need to buy Euros in the near future to speak with to their account manager about the various options to ensure you get the very best rate of exchange possible. Those selling would be wise to pay close attention to the Bank of England decision on Thursday, keeping fingers crossed for any Sterling negative sentiment and take advantage of the potential short term spikes.

US Dollar
GBP/USD traded in a relatively stable range in the early part of last week with the pound steadily climbing as high as 1.67 against the Dollar benefiting Dollar purchasers for most of the week. However, Friday’s Non Farm Payroll data saw the Pound slip by almost 2 cents by the end of the day.

Non Farm payroll is an important piece of data on the monthly economic calendar and shows the change in the number people employed in the US excluding the farming industry. It is widely regarded as a good indicator of the state of the US economy and as such often sees the markets swing heavily one way or the other depending on the results.

The figures showed that the US unemployment rate fell in November to 10%, down from 10.2% in October. In total, only 11,000 jobs went over the month - the smallest number since the recession began in December 2007. That was far fewer than the 130,000 expected by most analysts and was a very positive sign for the US economy and also the wider world economy as we emerge from the global recession.

This gave the dollar a boost and enabled it to track back some of the losses against the Pound sustained earlier in the week. However, many analysts are hoping there will be a knock on result and that the UK will post similar results with their employment data later in the month.
Before then the Pound is expected to have a rocky week ahead.

Analysts suggest the pound will come under pressure with the UK government's pre-budget report on Wednesday expected to throw the spotlight on Britain's ballooning debt as it pours money into the economy to drag it out of recession. To compound Sterling’s troubles, concern about the potential exposure of the British banking sector to Dubai's debt troubles is also weighing heavily on the sterling. With this in mind, speak to your FCG account manager to discuss your options to ensure that you are protected against the volatility expected within the market.

Other influences on the market this week are the Bank of England interest rate and Quantitative easing meeting which are widely expected to remain unchanged. Whilst in the US risk appetite trends are likely to remain important to US Dollar performance, although Friday's retail sales data will have bearing on the perception of US economic conditions.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

The weeks data, and Foremost on CNBC

Good Morning. Sterling rose against the Euro and US Dollar on Friday, but trimmed its gains as the U.S. currency surged after surprisingly strong jobs data. Today, we'll have a quick look at where rates went last week and as usual have a detailed look at the weeks data releases that may affect exchange rates.

First, we'll watch our Director of Foreign exchange on CNBC recently, talking about the pound strength and the US Dollar safe haven status, which is what's driving it. If you cannot view the video automatically, watch it on YouTube here.






Last Weeks Trading
The main reason for the pounds gains towards the ends of last week were the better than expected jobs data. As Adam mentioned on CNBC, earlier in the year the dollar enjoyed safe haven status. This meant that investors flocked to the USD and strengthened the currency. Now the world is exiting recession, investors are unwinding these positions, and as a result the US Dollar is weakening and the pound benefited.

UK Bank Bonuses
Also to watch this week is news that UK Bank Bonuses may be capped. This is a concern, as finance is our biggest export. If the UK is no longer an attractive place to do business for the banking sector, we could lose out to Switzerland and EU countries that have more favourable rules.

The government have itself said this is little to do with finance, and more to do with politics. The government want to jump on the bandwagon of the mood in the country at the moment, and so in the long run we could damage our biggest export for the sake of a few political points in the run up to the election.

Robert Peston the BBC business editor talked about the issue on Radio 4 this morning, in his own............ irritating.............. waaaaaaaaaaaaaay. You can read his blog here, and his written word is certainly better than listening to him speak. If you don't know what I mean, click here.

This Weeks Data
For the UK, we have the UK pre budgut report. There are concerns that this will highlight the levels of UK debt, which are reported to be £40k for every UK household. The measures outlined to combat this could cause weakness for Sterling.

We also have Retail Sales, Consumer Confidence, industrial and Manufacturing production and an Interest Rate Decision by the Bank of England, where we expect rates to be left on hold again at 0.5%. If the BoE is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the GBP.

Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish. We will also look to any further signals about the end of Quantitative Easing. So, this data could well cause further volatility for Sterling.

For the EU, we have a speech by the ECB president following their decision to keep rates on hold last week. He gives a press conference as to how the ECB observes the current European economy and the value of EUR. His comments may determine a short-term positive or negative trend. We also have the ECB monthly report that contains a detailed analysis of the prevailing economic situation and the risks to price stability. It also provides articles on a wide range of topics related to the tasks of the ECB.

For the USA, following last weeks better than expected jobs data, further good news could cause further dollar weakness, benefiting other currencies that are percieved as risky. The monthly budget statement on Thursday will be one to watch, as it summarises the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD. On the other hands, a negative figure (deficit) that indicates government debt is seen as bearish.

Elsewhere, we have GDP from Japan, and an interest rate decision for New Zealand. Rates are expected to be left on hold, but the Australians surprised us recently, and if the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.

Full Breakdown below. For more information on how these released could affect your particular requirements, please contact us today.

Monday
EU - ECB Speech
US - Fed Speech
US - Consumer Credit
EU - Sentiment Index

Tuesday
UK - Retail Sales
UK - Industrial Production
UK - Manufacturing Production
Ger - Industrial Production
Jap - Gross Domestic Produc

Wednesday
UK - Nationwide Consumer Confidence
Ger - Consumer Price Index
UK - Trade Balance
NZ - Interest Rate Decision

Thursday
Aus - Unemployment
UK - Interest Rate Decision
EU - ECB Monthly Report
US - Jobless Claims
US - Monthly budget Statement

Friday
UK - Producer Price Index
US - Import Prices
US - Consumer Sentiment
US - Retail Sales

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Sterling rises, outlook for December.

The pound gains. Sterling up at the start of December.
The pound rose on Friday ahead of the weekend, after better than expected Non Farm Payrolls data from the USA.

As I outlined in Fridays post, the report is highly volatile. Analysts expected the figure to show a decline of over 100 thousand jobs. However, the actual figure was an astonishing 11 thousand. This is much much better than expected, and has given confidence in the US markets.

How does this help the pound?
Confidence in the US Markets mean investors that have been hoarding US Dollars due to the currencies safe haven status, are now investing into riskier currencies. Sterling is one that is benefiting, and this is the reason the pound rose on Friday.

However, the gains may be short lived over fears of our level of debt. There's the governments pre budget report next week, and there are rumours there will be some bad news on the amount the UK owe, and the ways in which it's going to be paid back.

So, this could be the start of a recovery for the pound, or it could be a short term spike ahead of the pre budget report, as if this is bad the pound could fall back below €1.10.

Learn ways you can protect yourself here.

Open a free account with us today, and discuss how we can get you commercial exchange rates that are up to 6% better than you can achieve at the bank.

More updates on where Sterling GBP exchange rates will go throughout December, and into 2010 on Monday.

Pound falls after better news from the EU

The pound fell against the Euro and US Dollar yesterday after weaker than expected UK services sector survey. Also, the European Central Bank detailed steps to withdraw monetary stimulus, which strengthened the Euro and caused rates to fall. We've seen some recovery this morning however, and at 08:30am rates are as follows:

• GBP/EUR 1.1028
• GBP/USD 1.6623
• GBP/AUD 1.7951
• GBP/NZD 2.2957
• GBP/CAD 1.7558
• GBP/CHF 1.6617
• GBP/ZAR 12.219
• GBP/JPY 146.43
• EUR/USD 1.5069

News from Europe
The European Central Bank yesterday left rates on hold at 1% as expected, and this news did not really affect exchange rates. The speech afterwards however caused the Euro to strengthen and Pound to Euro rates fell as a result. They announced they would be lifting the stimulus measures, which signalled that the EU economy is recovering. The ECB announcement pushed sterling lower against the euro as it highlighted the market's view that the Bank of England is set to lag behind other major central banks in terms of exiting measures like Quantitative Easing.

As other economies recover faster than ours, their interest rates will start to rise, giving strenth to the currencies. As the Bank of England have already said that our interest rates will stay at record lows throughout 2010, and so the forecast for next year doesn't bode well for Sterling.

Poor UK PMI Data
In further negative news for sterling, the Chartered Institute of Purchasing and Supply/Markit activity index was lower than expected. "The UK services PMI was weaker-than-expected which highlights the likelihood of an underperforming UK economy. This sets sterling up for potential disappointment given that so much optimism about the UK economy had been priced in," said BNP Paribas currency strategist Ian Stannard.

Swiss Franc (CHF)
The dollar continued to probe support levels below parity against the franc on Thursday and hit a low of 0.9960 before rallying back above the 1.00 level later in the US session. The Euro ended little changed against the franc, still significantly below the 1.51 level.

The ECB was slightly more dovish than expected which will provide some near-term franc support. There is still likely to be considerable caution ahead of the quarterly monetary policy meeting next week. Speculation of further National Bank protests against franc strength
will tend to curb Swiss currency support.

Todays Events
All the data today is from the USA. We have employment data, but the most important release to look for is the Non-Farm Payrolls. The report presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile, and therfore hard to predict. So, any difference to the predicted figure can cause USD volatility. We're expecting the decision at 13:30pm to show a negative figure of -111k. If it's more than this, expect GBPUSD rates to climb, and vice versa.


When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Important day for GBP/EUR rates

Good Morning. The pound rose against most currencies yesterday, after a period of decline. This morning at 08:30am rates are as follows:

• GBP/EUR 1.1035
• GBP/USD 1.6689
• GBP/AUD 1.7906
• GBP/NZD 2.2916
• GBP/CAD 1.7457
• GBP/CHF 1.6638
• GBP/JPY 146.44
• GBP/ZAR 12.117
• EUR/USD 1.5117

Sterling rose against the USD and EUR yesterday, extending gains made the previous day as possible fallout from Dubai's debt-related problems eased as it looks like UK banks are not as exposed to the debt problems there as first thought. Risk assets also got a boost after data showed U.S. private sector employers shed fewer jobs in November from October, marking the eighth straight monthly decline in private-sector job losses.

The pound also rose against a broadly weaker yen, traders said. The yen fell in the wake of the Bank of Japan's emergency policy meeting on Tuesday where it said it provide more liquidity through new fixed 3-month funding.

Eurozone
Today is an important day for GBP/EUR in particular, as we have lots of important data releases from the Eurozone. We have the following releases that will likely affect exchange rates:

EU - Gross Domestic Product. This is is a measure of the total value of all goods and services produced by the Eurozone. The GDP is considered as a broad measure of the Eurozone economic activity and health. A rising trend has a positive effect on the EUR, while a falling trend is seen as negative. We expect this to show a quarterly rise of 0.4% and an annual decline of -4.1%.

We also have Retail Sales for the EU. This is is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. We expect a monthly rise of 0.2% and a decline year on year of -2.4%.

An interest rate decision is also due for the EU. We expect rates to be left on hold for this month at 1%. A little after the announcement, there is a speech by the ECB. This will be more important than the decision itself.

They give a press conference as to how the ECB observes the current European economy and the value of EUR. His comments may determine a short-term positive or negative trend. If the speech seems to indicate rates may rise in the coming months, expect the Euro to strengthen and GBP/EUR rates to fall.

If the releases from Europe are good today, then we will probably see the recent rise in rates come to an end. If however the releases are not as good as expected, then the Euro may weaken. Either way, we'll probably see some volatility for exchange rates today.

To take advantage of any spikes in the market, you may wish to consider placing a Limit/Stop Loss order. A Limit Order is an order to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you.This is one of the two most common types of orders, the other being a Stop Loss Order.

A Stop Loss Order is used when the market is moving in a negative direction for your currency. An order is placed on file with your broker to help ease the stress of adverse market movements.A stop loss order instructs your broker to buy when the currency hits a certain point. The purpose of the stop loss is obvious – you want to prevent any further movement before the currency falls any further.

To find out more about these type of contracts, and if they are suitable for you, contact us today.

USA
We have lots from the US today also, including various measures of unemployment. If figures are good, then we will probably see the dollar weaken slightly as investors take good news as a sign of economic recovery, and diversify their investments to riskier currencies.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Pound up slightly with house prices

Good Morning. Sterling rose against a broadly weaker dollar on Tuesday, although gains were somewhat hampered as data showed growth in UK manufacturing activity unexpectedly slowed. Rates @ 08:30am are as follows:

GBP/EUR 1.0990
GBP/USD 1.6605
GBP/AUD 1.7884
GBP/NZD 2.2792
GBP/CAD 1.7341
GBP/CHF 1.6569
GBP/JPY 144.74
GBP/ZAR 12.058
EUR/USD 1.5103

UK House Prices
The pound also rose slightly after better than expected UK house price data. UK house prices have risen for the seventh consecutive month, helped by better-than-expected news from the job market, the Nationwide has said. But overall there has been some surprise that prices have continued to rise steadily in the recession.

The Bank of England yesterday said Britain's economy has probably passed its low point and is likely to recover strongly over the coming years, but inflation was not an immediate threat.

A Reuters poll on Tuesday showed all respondents said the BoE has nearly finished with its quantitative easing programme but won't raise interest rates from their record low until at least October next year. This is good news in one way, as it indicates that the UK may finally be catching the rest of the world up in exiting recession.

however, the fact that our rates are likley to stay at record lows for nearly another year means the pound will probably remain weak. The EU and USA are likely to start raising their interest rates into next year, and this means more return for investors, and thus more investment into these currencies. More investment strengthens the currency.

With rates likely to remain low in the UK, it wont be an attractive investment, and so other major currencies are likely to rise before ours, and this will hamper a recovery in Sterling Exchange rates.

Weak US Dollar pushes up gold
A weak US dollar has pushed up demand for gold to another record level. Gold struck $1,201.63 (£722.69) an ounce on the London Bullion Market, after striking historic peaks over recent weeks. Demand for gold has been fuelled by moves by central banks to diversify assets.
A weaker dollar makes gold cheaper for users of rival currencies, which stimulates demand for the precious metal. In turn, this pushes up the price in dollars.

A weak dollar is also good for those needing to buy them with Sterling. Rates were as low as $1.30 earlier in the year, and now stand at $1.66. The dollar is weak because as the world exits recession, many investors that had funds in USD as a safe haven are now moving into other currencies weakening the dollar. The pound is not one of the currencies benefiting however due to our low interest rates. The dollar weakness wont last forever, so those with a need to purchase USD should consider doing so sooner rather than later.

Open an account with us for free, and take advantage of our commercial exchange rates.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Pound drops after confidence falls.

Good Morning. Sterling hit a one-month low against the euro on Monday after an unexpected fall in British consumer confidence underlined weakness in the domestic economy.

The pound also slipped against the dollar after earlier gaining on the view that Dubai may have avoided the worst of its debt-related problems, prompting some demand for currencies considered to be higher risk. Rates @ 08:30am are as follows:

• GBP/EUR 1.0945
• GBP/USD 1.6476
• GBP/AUD 1.7960
• GBP/NZD 2.2852
• GBP/CAD 1.7292
• GBP/CHF 1.6516
• GBP/JPY 143.29
• GBP/ZAR 12.138
• EUR/USD 1.5045

Pound/Euro

This week will see the European Central Bank announce its latest interest rate decision, Although it is expected to remain at 1% a rate increase cannot be ruled out with the Euro zone now officially out of recession and building towards full recovery. However, the Euro could find further support if the GDP projections are more optimistic than expected, and if it signals a phasing out of stimulus measures more quickly than previously expected.

Tuesday's unemployment report will also be closely-watched for evidence on the strength of the current European Workforce. If figures are lower than expected we may see Euro Strength however if figures are higher than expected we will see the reverse and potential Euro weakness.

Last week was generally a reasonably quiet week for Sterling a drop in investors' risk appetite after Dubai's request to delay debt repayments gave the Euro a fresh impetus, with Euro zone banks thought to have less exposure to the UAE region than their UK counterparts.

Currently we are seeing a relatively stagnant market with not too much movement either side. What one can do to do combat this is to put in a STOP/LIMIT order; this allows you the client to potentially achieve a rate which is currently not available on the market place.

For e.g. if you are looking to achieve a rate of 1.12 and the market is currently not there you put a limit to try and achieve this over an allotted time frame, and to protect yourself you may place a stop at around 1.08 to safeguard your currency against any pitfalls within the market. (This example is set for those buying Euros)

Pound/US Dollar

This weeks GBP/USD rates showed the full volatility of the markets climbing to above the 1.67 level earlier in the week only to fall to below the 1.63 mark towards the end of the week. Initial losses to the Dollar came as a result of comments from the Federal Reserve that declines would be tolerated so long as such movements are not disorderly, along with comments also coming from the Russian Central Bank that it would diversify its currency reserves.

However, the US Dollar found much needed strength towards the end of the week on the back of its haven status after a sudden deflation in investor’s risk appetite after the breaking news regarding the debt crisis in Dubai.

US GDP during the third-quarter was revised down to a 2.8% annualized pace from 3.5% previously. However, the minutes of the US Federal Reserve's November policy meeting revealed a more optimistic outlook, which was supported by stronger than expected housing market data and labour market data.

Finally this coupled with Weak GDP results from the UK, GBP/USD ultimately closed down 0.05% at 1.6498, those converting US Dollars into Sterling.

Looking forward to this coming week, risk appetite trends are likely to remain a major influence to the US Dollar's performance and are especially likely to be influenced by any news form Dubai. Additionally this week also sees the release of the Non-farm Payrolls report which will be watched closely for evidence that the US labour market is close to reaching a turning point.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Outlook for the pound, and the weeks data.

Good Morning. Today as usual, we'll take a detailed look at the weeks data and how this may affect exchange rates. Let's have a quick look at where rates stand this morning:

• GBP/EUR 1.0971
• GBP/USD 1.6502
• GBP/AUD 1.8020
• GBP/NZD 2.3000
• GBP/CAD 1.7408
• GBP/CHF 1.6526
• GBP/ZAR 12.185
• GBP/JPY 142.10
• EUR/USD 1.5036
  

The main news to kick off the week is the debt crisis in Dubai. The main stock markets in Dubai and Abu Dhabi have dived at least 6%. The falls came after Dubai's property developer, Nakheel, asked for trading of some of its Islamic bonds to be suspended.

Shares are trading for the first time since the state-owned property company Dubai World asked for an extension on repaying its debts. The central bank of the United Arab Emirates said on Sunday it would provide banks with extra liquidity.

While shares in the Middle East dropped sharply, Asian shares rebounded on Monday on hopes the Dubai debt crisis will not spread to other financial markets after the UAE central bank decision. The yen rose against the dollar after the announcement from Nakheel, paring earlier declines.

The fear for Sterling, is that many UK banks are heavily exposed to this, as they have lent Billions of pounds into this market. As I've said here before, finance and banking is one of the biggest parts of our economy, and one of our biggest exports. So, any exposure could be negative for the pound.

"The UK has the biggest loan exposure to Dubai among the G7, which should ensure sterling underperformance against the forex majors," said Lena Komileva, head of G7 market economics at Tullett Prebon.

This Weeks Data
For the UK, we have already had Consumer Confidence data today, that measures the level of consumer confidence in economic activity. The figures were much worse than expected, and the pound has fallen as a result. We also have some inflationary measures later in the week. The main driver for the pound is likely to be the developing news from Dubai; as UK banks have lots of exposure to this market, it doesn't bode well for Sterling.

In the Eurozone we also have inflationary measures, along with Gross Domestic Product and an interest rate decision. It's likely that rates will be left on hold, so the main news to watch is Gross Domestic Product. This a measure of the total value of all goods and services produced by the Eurozone. It's considered as a broad measure of the Eurozone economic activity and health, and can therfore have a big impact on the Euros value, and thus GBP/EUR rates.

In the USA, we have various measures of employment, and Nonfarm payrolls on Friday. The report presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile, and therfore hard to predict. So, any difference to the predicted figure can cause USD volatility.

Elsewhere, we have GDP for Canada and Switzerland, retail sales for Australia, and Commodity prices for New Zealand. This is is considered as an early indicator of export price changes. The price changes influence GDP and exchange rates. An increase in prices may indicate strength of the NZD, while a decrease in prices may indicate weakness of the NZD.

Monday
UK - Consumer Confidence
UK - Money Supply
UK - Mortgage Approvals
EU - Consumer Price Index
Can - Gross Domestic Product

Tuesday
Aus - Building Permits
Aus - Interest Rate Decision
Swi - Gross Domestic Product
Ger - Retail Sales
Ger - Purchasing Managers Index
EU - Purchasing Managers Index
EU - Unemployment

Wednesday
UK - PMI Construction
EU - Producer Price Index
US - Employment

Thursday
Aus - Retail Sales
NZ - Commodity Prices
EU - Purchasing Managers Index
UK - Purchasing Managers Index
EU - Gross Domestic Product
EU - Retail Sales
EU - Interest Rate Decision
US - Jobless Claims

Friday
Swi - Consumer Price Index
Can - Unemployment
US - Nonfarm Payrolls
US - Unemployment

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Pound falls again on Dubai news

Good Morning. The pound has remained under pressure after concerns over exposure of UK Banks to the debt crisis in Dubai. Rates @ 08:30am are as follows:

• GBP/EUR 1.0988
• GBP/USD 1.6325
• GBP/AUD 1.8207
• GBP/NZD 2.3175
• GBP/CAD 1.7521
• GBP/CHF 1.6578
• GBP/ZAR 12.350
• GBP/JPY 140.77
• EUR/USD 1.4853

Reuters have reported that Dubai's shock move earlier in the week to restructure Dubai World, and delay repayment on some of the company's $59 billion of liabilities, sent ripples through financial markets, denting equities and riskier currencies.

Some analysts said the pound was underperforming because of concerns that some UK banks may be affected, although no exposure was confirmed.

"There are concerns regarding the extent of the exposure of the UK banks to Dubai, hence sterling is coming under pressure," said Ian Stannard, currency strategist at BNP Paribas.

The pound is particularly sensitive to any banking sector problems, given the fact that the financial sector makes a large contribution to the UK economy. This is in addition to the news earlier in the week that the Bank of England gave a £60bn loan to some UK banks.

Lack of confidence in the Banking sector is one of the main drivers for Sterling weakness at the moment. As yesterday was a market holiday in the US for thanksgiving, trade was fairly thin. Most investors chose to sell riskier currencies such as the pound, helping to dent the currency.

Strong Yen harming Japanese Eeconomy

Japan's finance minister has said the strength of the yen is harmful to the country's economy.
In trading the currency has touched 84 to the dollar, the US currency's lowest level since the mid-1990s.

A high yen damages the competitiveness of Japanese exports, which have been the engine of the country's growth.With much of the relative strength caused by dollar selling rather than yen buying, there may be little the government can do alone.

Enjoy your weekend.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me

Why has pound fallen November '09

Good Morning. The pound has fallen quite a bit overnight, after yesterdays GDP data showed that the UK is the only major economy still in recession. At 08:30am pound exchange rates are as follows:

• GBP/EUR 1.0971
• GBP/USD 1.6556
• GBP/AUD 1.7971
• GBP/NZD 2.2914
• GBP/CAD 1.7407
• GBP/CHF 1.6560
• GBP/ZAR 12.197
• GBP/JPY 143.72
• EUR/USD 1.508

Sterling Falls again
Sterling fell this morning, losing more than 1% against the US Dollar while the pound also fel against the Euro, hitting a 1 month low as it remained under pressure in the wake of Wednesday's gross domestic product data.

The data showed the British economy shrank by 0.3 percent in the third quarter compared with the initial estimate of a 0.4 percent contraction. This came as a disappointment to some who were looking for a bigger revision and it exacerbated concerns that the UK economic recovery is lagging that of other major economies. So, the figures were not as good as some analysts had expected, and so this is the main reason for the dip in exchange rates.

The new figures confirm the economy has contracted for six consecutive quarters - the longest unbroken stretch of since records began in 1955. The UK is lagging many of its rivals. France, Germany Japan and the US have all already exited recession.

Earlier on Wednesday, Bank of England monetary policy committee member Andrew Sentance said there were signs the UK economy had returned to growth in the second half of this year, however the markets have reacted and Sterling has lost a significant amount of it's value.

Given our huge debt levels, and concerns over the banking sector mean there's little hope the pound will rebound any time soon. Many analysts are expecting the pound to remaind weak until at least the General Election next year. If you have a requirement to purchase a Foreign Currency with Sterling, then you should consider fixing rates now. Even if your currency is not needed for some time, you can pay a 10% deposit and lock in a rate for the full amount you need, for up to 2 years into the future.

This will protect you against further losses, and give you peace of mind knowing what your currency will cost you.

Dollar Falls
The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors. The dollar slipped to 86.5 yen, its lowest level since July 1995.

The US has indicated it is unconcerned about the dollar's slide, and will not intervene to strengthen it. Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.

Usually the pound benefits from this type of news, but for the reasons already listed above, not many people are interested in investing in Sterling right now.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote 'Blog'

Open a free Trading Facility

Open an online Trading Account

Email Me