Daily Archives: July 4, 2012
Falling PMI Data a Worry for UK Economy
Wednseday has seen a relatively flat day on the markets by close of European trading and we could well of seen the calm before tomorrows storm. We have the European central Banks (ECB) interest rate decsion and if they decide to cut rates from the current 0.25% level as widely mooted, then we could see the euro suffer as a result. We also have the Bank of England’s interest rate decsison and whilst this is meant to remain on hold at 0.5%, I do feel those holding Sterling have more to worry about and here is my reasoning for that.
Today UK PMI data for the service sector was released and it made for grim reading, as figures showed it had fallen to an eight month low. We have already seen UK PMI construction data fall to its lowest point in 2 and a half years yesterday, which sent shockwaves through the UK economy, as it was a fall in this figure that many experts believe resulted in the UK re-entering recession at the start of 2012.
This to me indicates it is very likely we will hear an annoauncemnt tomorrow from Mervyn King that of a further round of Quantitative Easing is needed, in order to give the UK economy a boost. If you add to this the damning views of Mr King on the UK’s banking sector and the current debacles with Natwest and Barclays, then to me it looks as if investors will lose short-term confidence in GBP.
We have already sen the USD gain over half a cent on GBP today, moving through 1.56 at time of writing and this to me is already a reaction to this poor UK data. Whilst its impossible to know the exact outcome of any economic decision on the currency markets I do feel any of you holding Sterling and looking to buy either EUR, USD or AUD should keep a close eye on events tomorrow, as I fear the results could cause GBP levels fall away over the coming weeks.
If you have an upcoming currency transfer and you would like to be kept up to date with all the latest market movements then please feel free to conatct me directly at mtv@currencies.co.uk or call me on 01494 787 478.
What will happen with the GBP/EUR exchange rate after the interest rate decisions in the UK and Europe on Thursday
As it is the 4th of July there is no data to come out from across the pond. Over here in the UK and Europe trading lines are still open and data releases are effecting the markets. Some of the key market movers that you should be wary of tomorrow is as follows:
Thursday
12:00 – BoE Interest Rate Decision
12:45 – ECB Interest Rate Decision
13:30 – ECB Monetary Policy Statement
13:00 – US Non-manufacturing PMI
This morning the EU released their retail sales for the region and it showed a decline down to -1.7% for the year but showed an increase for the month or May to 0.6% This has marginally strengthened the Euro against the pound during early morning trading.
You will see from above that the main market mover will be the interest rate decisions for the UK and in Europe tomorrow. There are many economists that are predicting that we will see QE arise in the UK (theoretically negative for sterling) and some are muting a rate cut for the Euro zone. Tomorrow is set to be a volatile day and if you are concerned about what may occur and would like to know the implications of any movements then please feel free to email me at bma@currencies.co.uk It is so difficult to predict exactly which way the rates will move and you may wish to look at placing limits in the market or secure your currency before the big decisions. Overall it would not surprise me to see the pound fall against the Euro by close of trading.
In other news The ex-chairman of Barclays is set to go in front of a panel today in connection with the LIBOR scandal. I for one feel that this story has a long way to run. Barclays have been hit with a record fine (£290m) and I am sure over the coming days and weeks we will learn that the scandal is likely to involve many other banks both here and across the pond. The banking sector has been rigged with controversy recently. The banks are under fire for their role in the financial crisis, are facing a new wave of public outrage over a systems outage at RBS last month and evidence of mis-selling financial products continues.
It is no wonder that here at www.poundsterlingforecast.com we are witnessing record breaking applications from clients looking at using a specialist for their currency needs. The trusts from the banks have diminished as they are a jack of all trades and master of none. If you are looking for a personal and bespoke service to help you maximise your currency transfer then join the thousands who currently use our service to send money overseas. Please feel free to contact me at bma@currencies.co.uk. If you inform me what your situation is I will explain all the options that are available to you to try and help you minimise your risk to volatile currency movements. Alternatively you may call me from the number on the side of this page. Just ask to speak with Ben Amrany and I will make sure that I am available to discuss all the options that are available to you.
Ben Amrany
