World First Foreign Exchange 6 August 2009 Update: Market Waits For Bank of England, ECB
Sterling moved higher yesterday as news from the UK continued to paint a picture of an improving landscape for the services sector in particular. PMI for the services industry rose to 53.4 versus an expected 51.8 with sterling jumping by 0.8% against both the USD and EUR.
Equity markets tripped lower as investors continued to take profit on trades that have made positive moves over the past few weeks. Movement on both equity and currency markets were depressed however as market participants waited on the sidelines for the data onslaught we have today.
We believe the Bank of England will hold rates at 0.5% with QE held at the £125bn. The minutes and next week’s Quarterly Inflation report will however show that the Bank will be ready to ease more should the economy not recover as expected.
Similar is expected from the ECB slightly later in the day and such our focus should be on the press conference afterwards. Trichet will continue his stance that current rates remain appropriate although given the recent uptick in data from the EU the speech may have a more positive slant than before.
All in all I expect the data today to be sterling positive; we made 5 trips above 1.70 against the USD yesterday and have since been pressurized lower. A good Bank of England report should see us move over with some momentum.
I will be writing a special report on QE, The Bank of England and the potential for GBP in the immediate aftermath of the decision plus with a look forward to the Inflation Report on Wednesday.
Latest Exchange Rates At Time Of Writing
Indicative Rates
Sell
Buy
GBP/EUR
1.1786
1.1813
GBP/USD
1.6978
1.7001
EUR/USD
1.4390
1.4410
GBP/JPY
161.36
161.95
GBP/AUD
2.0139
2.0186
GBP/NZD
2.5323
2.5381
GBP/CAD
1.8155
1.8217
NZD/USD
0.6698
0.6718
GBP/ZAR
13.56
13.61
USD/ZAR
7.96
8.00
GBP/PLN
4.8477
4.8770
EUR/JPY
136.69
137.16
Rates are dependent on amount transacted. Please call 0207 801 9080 for a live rate quote.
Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.
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Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.
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