Tuesday, 1 December 2009

The pound headed lower aginst the USD yesterday, undermined by weak UK data, though it is recovering this morning

The pound fell to briefly test levels below $1.64 yesterday, under pressure following weak economic data from the UK and on falling stocks in Europe.
  • The pound was little changed against the dollar in early trading, having actually risen earlier in the day on the view that Dubai may have avoided the worst of its debt-related problems, which prompted some demand for currencies considered to be higher risk.
  • However, sterling began to slide back after the headline UK Gfk consumer confidence balance fell unexpectedly from -13 to -17, the sharpest monthly decline for 13 months.
  • Separately, data showed the fourth consecutive fall in UK consumer credit. This is a trend that is likely to continue as households seek to pay back unsecured credit.
  • The pound also came under pressure as European stock markets lost further ground, with major indices down over a cent by the close of play. Later in the day though, US equities did turn positive, which saw the dollar cap its gains.
  • Currently the pound is pushing higher against the US dollar with European equities opening on a positive note.
  • Investors are now awaiting important manufacturing data to be released today from both the UK and the US.

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