gbp

The Bank of England's discomfort

The price action in sterling today reflects the fact that there were some prevailing expectations of an extension of the Bank’s QE program which were unfulfilled. Cable was modestly firmer on the release as shorts were covered, but only by around 20-30 pips or so. Today’s decision will have been guided by the quarterly Inflation Report due to be published next week. In this context, the Bank could well have a tough time explaining why once again it will be revising up its inflation projections and lowering growth. Read more

10/05/2012 @ 11:47 GMT

Creeping political paralysis

The implications of events in both France, and more so Greece, are seeping through markets and have made themselves known within most asset classes. In FX, it’s created further pressure on the high-beta currencies, with AUD/USD nudging very close to parity in overnight trading. The Kiwi and Mexican peso are also notably softer. On commodities, gold has pushed below the USD 1,600 level, down 2% yesterday and, significantly, breaking below the long-term uptrend line drawn from the November 2008 lows. Read more

09/05/2012 @ 07:00 GMT

Sterling’s ongoing resilience

We’ve remarked before on the resilience of sterling and has again been in evidence over the past week; of the majors it was only the yen outperforming the pound. This comes despite the weakness seen in the PMI data and also the earlier confirmation of the recession in the UK in light of the negative growth outturn in the first quarter. The latest data overnight have again confirmed the fragility of the domestic sector. It’s not a great surprise to see weaker indicators from the housing market, with the RICS house price balance weakening from -11 to -19. Read more

08/05/2012 @ 08:17 GMT

A trans-Atlantic good-news story

Genuinely positive stories on the economic front are relatively rare these days, with no fewer than ten of the EU’s 27 economies in recession and Australia’s central bank forced to cut rates by 50bp yesterday in part because the non-mining economy is contracting. Thankfully, both Germany and America continue to defy the global gloom. In the US, the manufacturing sector is expanding at a respectable pace, propelled by solid growth of both domestic and export orders. Read more

02/05/2012 @ 07:42 GMT

Cautious pessimism

During April, markets have displayed a far more cautious tone to that seen through most of the first quarter. FX markets were earlier than most to adopt this tone, with high-beta currencies turning at the start of March, much earlier than most equity markets. As we enter the last full week of April, this approach seems set to continue. The first round of voting in the French presidential election campaign has strengthened the view that Sarkozy is unlikely to see a second terms and markets are slightly nervous regarding his likely successor, Francois Hollande. Read more

23/04/2012 @ 07:14 GMT

The pound’s purple patch

This morning’s stronger than expected retail sales figures make it even more likely that the UK economy avoided falling back into recession last quarter. In the three months to March, the volume of retail sales rose by 0.8%, quite a respectable performance. Moreover, apart from sluggish demand for clothing and footwear, growth in consumer demand in the first quarter was broadly based. Naturally, the month of March was aided by a surge in fuel sales; it being the warmest March for 55 years also helped. Read more

20/04/2012 @ 09:52 GMT

A lovely shiny pound

Of the major currencies it has been the proud pound that has been leading the way so far this year. Following yesterday’s less dovish MPC Minutes and the surprisingly strong employment figures, cable is back through 1.60 once more and EUR/GBP is at a 20mth low of 0.8180. Against the Japanese yen the pound has advanced by almost 10% so far this year. Read more

19/04/2012 @ 07:23 GMT

Britain is warming up

It just keeps on getting better. After yesterday’s unambiguously positive UK economic news, there is more good cheer around this morning. The construction PMI for last month jumped to a 21mth high of 56.7, well above expectations. Building activity was clearly assisted by the third warmest March in Britain for 350 years! Read more

03/04/2012 @ 09:10 GMT

Aussie wobbles

The recovery in the Aussie seen over the past few sessions was brought to a halt overnight, AUD/USD stalling above the 1.06 level. The minutes of the latest RBA meeting were one factor in eliciting a more cautious approach - the door was left open to further easing should the global environment deteriorate. Also in the background is the slower pace of growth expected in China, which is expected to impact the domestic economy, but the Aussie has remained surprisingly resilient to such fears. Read more

20/03/2012 @ 08:03 GMT

Sterling’s shine

It’s a big week for sterling, with the Chancellor presenting his annual budget speech on Wednesday. Sterling has performed well of late, being the strongest performer over the past week and during the dollar sell-off seen on Friday. This allowed cable to push back above the 1.58 level. Sterling also managed to turn around the weakening trend seen against the single currency during the early part of March, EUR/GBP nudged back towards the 0.8300 level. Read more

19/03/2012 @ 10:15 GMT

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