Daily Archives: August 7, 2012
Why has the pound fallen against the Euro and Australian Dollar? Sterling would not be contesting any medals in the Currency Olympics!
With a so far outstanding performance in the Olympics taking much of the focus in the UK, you could be forgiven for thinking all was well! Unfortunately the more recent performance of the pound would barely have met qualification yet alone receive a medal. Whilst the national mood soars the pound and the UK economy is once again struggling to get out the starting blocks.
‘If the pound entered the Currency Olympics it would struggle in qualification let alone contest a medal’
The pound has struggled so far in August on the back of some much worse than expected economic data. Of note Manufacturing last week suffered its biggest one month drop in over three years! The outlook is not bright and I expect further sterling losses in the short term.
GBP DATA TODAY – Industrial and Manufacturing Production Data 09.30 UK Time. This is likely to affect short term movements on the rate although the continued decline will probably persist with tough resistance at the 1.25 mark. And in the afternoon at 3pm we have the UK NIESR GDP report.
Tomorrow we have the Bank of England Quarterly Inflation Report which is also likely to hurt the value of sterling. Our experienced traders can keep you informed of the latest trends so you don’t miss out.
GBPAUD – How much worse can it get?
As expected Australian Interest Rates were kept on hold. Despite 1.25% in rates cuts this year the Aussie has continued to make gains against sterling. The country may be suffering in the Olympics but the currency is breaking and close to breaking records against many currencies including the Pound, Euro and US dollar.
Historically the performance of the Aussie has been linked to confidence in the global economy. Lately this correlation has distorted as investors overlook the more historic rules amidst more global concerns on debt. And it is not just investors buying the Aussie, I heard that the Swiss National Bank (SNB) have been increasing their holdings of Australian Dollars, reflecting the weight of support behind the currency.
When it was historically at 2.3-2.6, many questioned whether the rate would ever break through the 2 barrier. It did. Many then questioned whether it would break 1.80 and 1.60, but it did. Now such levels can only be dreamt of. We may soon begin to look back on rates of 1.40 as excellent as the games changes on the GBPAUD rate.
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