Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. GBPEUR/GBPUSD The Pound declined against the majors yesterday, as the market reacted to the news that the UK economy contracted in the first quarter by 0.2% in the preliminary figures released yesterday morning. The -0.2% result has come as a major shock with the market anticipating modest growth of 0.1% following the recent good run of economic data on services and manufacturing. The sharp decline in construction has contributed to the contraction and the UK economy is now officially in a technical recession following two consecutive quarters of negative growth. The kneejerk reaction to the data has seen the Pound weaken against all of the 16 most actively traded currencies but the UK currency managed to consolidate and edge back towards 1.22 versus the Euro and 1.62 against the Dollar. The Pound initially dropped from a seven-month high against the U.S Dollar, as speculation resumed that the Bank of England would look to extend quantitative easing measures in light of the contraction in the UK economy. The UK currency fell by the most in two months against the Euro and Standard Chartered Plc said it was ending its bet the Euro would drop against the Pound, after the unexpectedly weak growth report. Nevertheless, the Pound stood strong against the Euro last night, as the defensive demand for Sterling as an alternative to the Euro remained firm. It may be a matter of time though before investors begin to shun the Pound, as they will be buying the currency from an economy also in a recession. The fact the UK has retained its AAA status, for now at least, could prove significant in maintaining demand for the Pound. There was an element of suspicion surrounding the GDP figures yesterday with expectations that it would be revised higher. There was some speculation that the Bank of England would have little option but to extend quantitative easing measures at the May meeting. The contraction in growth and technical recession is also politically damaging for the government. The Pound found support in the region of 1.6080 against the Dollar and rallied through the course of the day. The latest Nationwide consumer confidence data recorded an increase to a nine-month high of 53 from 42 previously, which helped offset the GDP impact. It will be interesting to gauge the reaction of the Pound in the market today now that the figures will have been properly absorbed. EUR/USD The Euro continued to test resistance levels above the 1.32 region against the Dollar, amid speculation of firm corporate demand in the Euro-zone. The German government also upgraded its 2013 growth forecasts and also called for an eventual return to normality for ECB policies. There were still tensions surrounding the Euro-zone and that will continue to remain an important focus over the coming weeks. In the U.S, the latest durable goods orders data was sharply weaker-than-expected with a headline 4.2% decline for March. The Federal Reserve left interest rates on hold at the latest policy meeting and also maintained its commitment to maintaining very low interest rates. There was a 9-1 vote for the statement with Lacker once again dissenting, opposing the pledge to keep rates low through the end of 2014. The Fed did upgrade its growth outlook for 2012 and was generally more optimistic surrounding the labour market. There was still an element of caution with comments that global financial turmoil still posed important downside risks to the economic outlook. The Dollar was unable to make headway following the Fed meeting as the broadly dovish Fed tone limited Dollar support on both defensive and yield grounds. If you need any further assistance, or require a live dealing quote - please do not hesitate to contact me on 01736 335250 or send an email to info@torfx.com Regards,
TorFX Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions. Unauthorised copying or re-wording of this content is prohibited. The copyright of this content is owned by Tor Currency Exchange Ltd. Any unauthorised copying or re-wording will constitute an infringement of copyright. | 
No comments:
Post a Comment