Yesterday’s GDP figures indicated that the UK’s economy is not quite as far out of the woods as some senior officials would like us to believe. This figure came as somewhat of a surprise, considering in general UK economic data has been steadily improving since the start of the year. Following the release of these figures the EUR saw sharp gains against sterling, pushing levels back down through 1.22 and for a while it looked as if it may continue on, eroding the fantastic buying opportunities we have seen of late.
However, by late afternoon this spike had been erased and GBP had not only moved back through 1.22 but surpassed the levels of the previous day, reaching a peak of 1.2277. In my opinion this proves just how little faith investors currently have in the single currency and the well documented problems not only Spain but across most of the EU region, mean that any move back through 1.20 is unlikely in the short-term. We also need to remember this was only the initial figure and it is due to be revised twice over the coming months, so don’t be surprised if the ‘recession’ we have re-entered is short lived.
GBP/USD levels continue to hold firm above 1.60 and today even touched briefly on 1.62, before falling away during afternoon trading. The greenback is suffering from a string of positive data in the US, including a fall in unemployment figures and a faster growth rate than predicted. This would usually indicate strength for a countries currency but as I have written previously the USD is often used as a global barometer, meaning poor economic growth leaves investors running for the relative sanctuary of the Dollar. On the flip side an upturn in the global economy (often based on data released in the US) means investor’s appetite for risk increases and they move away from the safe but usually low yielding USD and will invest in riskier currencies such as the ZAR or NZD, which fluctuate more and therefore offer more chance of a higher yield. US GDP figures are released tomorrow at 12.30 and any variation from the 2.3% prediction could see movement for GBP/USD.
If you have an upcoming currency requirement and would like the opportunity to access award winning exchange rates then please feel free to contact me directly at email@example.com or call me on 01494 787 478.