The pound continued its recent upwards trend against the single currency yesterday after inflation unexpectedly rose in February and Bank of England Governor Mervyn King said the central bank's quantitative easing programme may be reduced if it is successful. Consumer Price Inflation rose to an annual rate of 3.2%, despite many expecting that it would actually fall to 2.6%. As expected the Retail Price Index fell, but not into negative territory yet, with it currently sitting at 0%. Mervyn King stated that CPI’s surprise jump was due to the pound’s weakness making imports more expensive. It was also interesting to note that King warned against further borrowing to stimulate the economy, due to the already dire state of the UK’s finances.
The Confederation of British Industry release their distributive trades survey this morning, whilst IFO release the business climate and expectations survey in Germany.
Wednesday, 25 March 2009
Cable pushes higher on supprise UK inflation data
In Tuesday’s trading the pound strengthened over the US dollar by 2.06 cents to close the day at the 1.4680 level. During the session the pound set a six-week high of 1.4778 after it was buoyed by higher than expected inflation data. The Retail Price Index (RPI) measured inflation at 0.0% in the year to February, the first time in 49 years that inflation has fallen this low and came as a result of a 0.9% fall on the month. The Consumer Price Index (CPI), a measure of inflation which excludes mortgages, currently stands at 3.2% on the year, whilst Core CPI, which excludes the prices for volatile items such as food and energy, was measured at 1.6%. These results were higher than expected, with many investors expecting the RPI to fall below 0.0%. This news, as well as improved risk appetite from the announcement of the Public-Private Investment Programme on Monday in the US, saw demand for the pound remain firm. Comments from the BoE Governor Mervyn King also helped the pound as he suggested that the UK’s quantitative easing programme could not be expanded.
In today’s trading investor sentiment has shifted toward a more risk averse stance and as such the dollar has strengthened back over the pound as its safe haven demand has increased. Later today MBA Mortgage Applications, Durable Goods Orders, New Home Sales and EIA Crude Oil Stocks Change data is announced in the US. Meanwhile the Confederation of British Industry release their distributive trades survey in the UK this morning.
In today’s trading investor sentiment has shifted toward a more risk averse stance and as such the dollar has strengthened back over the pound as its safe haven demand has increased. Later today MBA Mortgage Applications, Durable Goods Orders, New Home Sales and EIA Crude Oil Stocks Change data is announced in the US. Meanwhile the Confederation of British Industry release their distributive trades survey in the UK this morning.
US dollar recovers against euro on poorer sentiment
The US dollar recovered ground against the euro yesterday, recovering almost 2 cents as investors bought back into the safe haven currency as recent risk appetite faded somewhat. North American equity markets finished lower yesterday evening, a day after a big rally that was driven partly by news of the US plan to help rid banks of toxic assets. As optimism about that plan faded yesterday the US dollar rose as its safe-haven appeal increased.
Also, the euro was undermined as traders shifted their focus to a change of tone from European Central Bank members that suggested impending economic measures from the eurozone. Both ECB President Jean-Claude Trichet and governing council member Axel Weber said eurozone rates aren't at their bottom. The European Central Bank has not announced quantitative easing plans as of yet, but some analysts are now predicting that a rate cut at the ECB’s next meeting on 2nd April may be combined with news of quantitative easing.
In Germany, IFO Expectations are due to be released this morning at 09.00 GMT. In the US, there are several significant announcements taking place today including MBA Mortgage Applications, Durable Goods Orders and New Home Sales.
Also, the euro was undermined as traders shifted their focus to a change of tone from European Central Bank members that suggested impending economic measures from the eurozone. Both ECB President Jean-Claude Trichet and governing council member Axel Weber said eurozone rates aren't at their bottom. The European Central Bank has not announced quantitative easing plans as of yet, but some analysts are now predicting that a rate cut at the ECB’s next meeting on 2nd April may be combined with news of quantitative easing.
In Germany, IFO Expectations are due to be released this morning at 09.00 GMT. In the US, there are several significant announcements taking place today including MBA Mortgage Applications, Durable Goods Orders and New Home Sales.
Pound strengthens over Aussie dollar
The Australian dollar fell from its 10 week high against sterling yesterday after UK inflation rose unexpectedly in February. The rise in British consumer price inflation is believed to be temporary due to sterling’s recent weakness. This was coupled with Bank of England Governor Mervyn King’s comments that the central bank’s quantitative easing programme may be reduced if it is successful. Support for sterling was also seen as investors cheered a US plan to soak up toxic assets which have plagued the credit markets, however gains were limited by weaker equities.
Kiwi dollar weakens against pound
The New Zealand dollar fell lower yesterday as a slip in global equities saw risk appetite weaken. The kiwi dollar’s advance was also kept in check ahead of expected weak economic data, with fourth quarter current account and gross domestic product data due later this week. Current account data will be avidly watched this evening after Finance Minister Bill English warned about New Zealand’s ‘challenge of chronic twin deficits’.
Tuesday, 24 March 2009
A good day for the pound....
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UK inflation hits 0%, lowest level in 49 years
It was announced in the UK this morning that the Retail Price Index (RPI) measured inflation at 0.0% in the year to February. This is the first time in 49 years that inflation has fallen this low and came as a result of a 0.9% fall on the month. The Consumer Price Index (CPI), a measure of inflation which excludes mortgages, currently stands at 3.2% on the year.
These results are better than expected as many investors were expecting RPI as a measure to fall below 0.0%. The pound has shown good strength in this morning’s trading against a basket of major currencies as this news, as well as improved risk appetite from yesterday’s announcement in the US, sees demand for the pound remain firm. The US government’s Public-Private Investment Programme has buoyed investor confidence and stock markets around the world continue to perform well.
The pound currently stands 1.70% up on the euro and 1.15% up on the US dollar. A market update will follow this post with full data.
These results are better than expected as many investors were expecting RPI as a measure to fall below 0.0%. The pound has shown good strength in this morning’s trading against a basket of major currencies as this news, as well as improved risk appetite from yesterday’s announcement in the US, sees demand for the pound remain firm. The US government’s Public-Private Investment Programme has buoyed investor confidence and stock markets around the world continue to perform well.
The pound currently stands 1.70% up on the euro and 1.15% up on the US dollar. A market update will follow this post with full data.
Risk appetite sees pound strengthen over euro
Sterling regained further ground against the single currency yesterday, following improved risk appetite in markets. This has come following the announcement in the US that they are set to adopt a $1 trillion plan to free banks of toxic assets – investors reacted with enthusiasm to the plan as equity markets around the world rose, with the FTSE 100 up by 2.9%. In early trading today the pound is continuing to rally, as risk appetite remains following a rally on Asian stock markets overnight.
Investors will take note of the UK’s February inflation data today, with the Consumer Price Index expected to fall further towards the Bank of England’s 2% target. The Retail Price Index is expected to turn negative for the first time in nearly 50 years, with the Consumer Price Index expected to follow in the summer as the UK flirts with a period of deflation.
The eurozone releases their PMI manufacturing and services data this morning, but expect GBP / EUR to take direction off equity markets today.
Investors will take note of the UK’s February inflation data today, with the Consumer Price Index expected to fall further towards the Bank of England’s 2% target. The Retail Price Index is expected to turn negative for the first time in nearly 50 years, with the Consumer Price Index expected to follow in the summer as the UK flirts with a period of deflation.
The eurozone releases their PMI manufacturing and services data this morning, but expect GBP / EUR to take direction off equity markets today.
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