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- Mar, 19 British Pound Weighed by Risks for Double-Dip Recession, Euro Extends Decline
- Mar, 18 Euro Sunk As Greece Bailout At Risk, Sterling Troubled By Disappointing Mortgage Approvals
- Mar, 17 British Pound Rallies as U.K. Jobless Claims Slump 32.3K, Euro Maintains Narrow Range
- Mar, 16 U.S. Dollar Loses Ground Ahead of FOMC Interest Rate Decision
- Mar, 15 Euro, British Pound Pare Previous Week’s Advance on U.S. Dollar Strength
- Mar, 12 Euro Rallies as Growth Prospects Improve, British Pound Extends Rebound
- Mar, 11 British Pound Advances as Inflation Expectations Push Higher, Euro Holds Tight Range
- Mar, 10 Euro Holds Narrow Range, British Pound Extends Decline as U.K. Manufacturing Falters
- Mar, 09 Euro, British Pound Slump as Investors Scale Back on Risk Appetite
- Mar, 08 Euro Maintains Range From Previous Month, British Pound Little Changed Overnight
- Mar, 05 Euro, British Pound Little Changed Ahead of U.S. Non-Farm Payrolls
- Mar, 04 British Pound Pares Decline as BoE Maintains Current Policy, ECB Holds Interest Rate at 1.00%
- Mar, 03 Euro Advances as Greece Announces Additional Measures to Curb Deficit, British Pound Halts Six-Day Decline
- Mar, 02 British Pound Extends Decline, Euro Slips to Fresh Yearly Low
- Mar, 01 Euro, British Pound Weighed by Economic Uncertainties – U.S. Dollar Rallies Across the Board
- Feb, 26 British Pound Fails to Benefit From Enhanced 4Q GDP Report, U.S. Dollar Mixed
- Feb, 25 British Pound Extends Decline as 4Q Investments Disappoint, Euro Weighed by Risk Aversion
- Feb, 24 Euro, British Pound Advance Ahead of Fed Chairman Bernanke’s Testimony
- Feb, 23 British Pound Weighed by Bank of England Testimony, Euro Gives Back as Risk Appetite Falters
- Feb, 22 Euro, British Pound Consolidate Overnight As Markets Await Clarity On Greece Bailout And Fed Direction
The British Pound bounced back on Friday to cross back above the 20-Day SMA (1.6633) and reach a high of 1.6643, and the currency is likely to hold a broad range over the following week as investors weigh the outlook for future policy.
Talking Points
• Japanese Yen: Continues to Lose Ground Against the Majors
• Pound: U.K. Public Savings to Rise, New Car Registrations Jump
• Euro: Bundesbank Raises Economic Forecast
• US Dollar: Non-Farm Payrolls, Factory Orders on Tap
British Pound Bounces Back to Cross Above 20-Day SMA, Euro Holds Narrow Range Ahead of U.S. Non-Farm Payrolls
The British Pound bounced back on Friday to cross back above the 20-Day SMA (1.6633) and reach a high of 1.6643, and the currency is likely to hold a broad range over the following week as investors weigh the outlook for future policy. The Bank of England is widely anticipated to hold the benchmark interest rate at the record-low on Thursday and maintain its GBP 200B asset purchase program in order to encourage a sustainable recovery, and long-term expectations for higher interest rates in the U.K. may drive the GBP/USD higher going into the following year as policy makers see the economy emerging from the recession.
A study by The Taxpayers’ Alliance found that the highest paid public servants in the U.K. received a 5.4% raise last year, which is more than double the rate of inflation, and named 806 individuals who earned more than GBP 150K in the year to April 2009. At the same time, the Financial Times said U.K. Treasury Minister Liam Byrne will unveil plans to increase the rate of public savings next week, which will exceed the GBP 9.0B target previously announced as the policy makers aim to balance the budget. Meanwhile, the economic docket showed new car registrations in the region surged at an annual pace of 57.6% in November to mark the biggest rise since September 1999, and conditions are likely to improve going forward as the expansion in monetary and fiscal policy continues to feed through the real economy.
The Euro continued to hold a narrow range against the greenback and within the previous day’s range as the overnight rally stalled at a high of 1.5093, and the single-currency may push higher going into the U.S. session as it continues to benefit from the rise in risk appetite. Meanwhile, the Bundesbank raised its economic forecast for Europe’s largest economy, and expects Germany to grow at an annual pace of 1.6% in the following year amid an initial forecast for a flat growth rate and sees economic activity weakening 4.9% in 2009 versus projections for a 6.2% contraction earlier this year. At the same time, the central bank forecasts unemployment to peak at 10.1% by 2011, while inflation is expected to grow at 0.9% in 2010 and 1.0% in 2011. As policy makers hold an improved outlook for the region, the European Central Bank may turn increasingly hawkish going into the following year as the economy emerges from the worst recession since the post-war period however, as President Trichet anticipates price pressures to remain subdued in 2010, the Governing Council may keep borrowing costs at the record-low throughout the first half of the following year as the central bank sees a risk for a protracted recovery.
The U.S. dollar weakened against most of its major counterparts during the overnight trade as investors raised their appetite for risk, and the reserve currency is likely to face increases volatility going into the North American trade as non-farm payrolls are forecasted to contract 125K in November. At the same time, the annual rate of unemployment is anticipated to hold at the 26-year high of 10.2%, while average hourly earnings are expected to grow at a slower pace as economists forecast wages to increase 0.2% after rising 0.3% in October. Moreover, factory orders are projected to hold flat in October after rising 0.9% in the previous month, and the slew of data could stoke a weakening outlook for private sector spending as households continue to face a deteriorating labor market paired with tightened credit conditions.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
DailyFX provides forex news on the economic reports and political events that influence the currency market.
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