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Market Update - GBP EUR The Pound has given the Euro a battering over the past week following news that further UK central bank stimulus now seems unlikely. The Bank of England's Monetary Policy Committee voted 8-1 in favour of maintaining its current asset purchasing target of 325 billion pounds which gave Sterling the push it needed to grow against the Euro to a fresh 19-month high of 1.2251. UK Consumer Price Inflation grew from 3.4% to 3.5% in March which boosted the Pound but put pressure on the BoE's target of bringing inflation down to 2.0% by the end of 2012. The unexpected rise in Consumer Price Index appeared to be a major factor in the MPC's decision to halt QE. Sterling's dogmatic performance last week was given further support as the Office for National Statistics announced a drop in the UK Unemployment Rate from 8.4% to 8.3%, and UK Retail Sales in March grew by an impressive 3.3% compared to an expected increase of only 1.3%. The Euro continued to be held back by its peripheral nation states, with Spanish 10-year bond yields rising above 6.0% which raised concerns as to the ability of the newly-built firewall to contain the sovereign debt crisis. The 17-nation bloc was dealt another blow this morning as Eurozone debt reached the worst level ever at 87.2%, Greece's debt to GDP rate was by far the weakest at a staggering 165.3%, with Italy following up with the Eurozone's 2nd most profligate budget deficit of 120.1%. Over the coming week Eurozone PMI's in Manufacturing and Services are expected to drop, Italian Consumer Confidence is predicted to weaken and the German Consumer Inflation Index is forecast to fall; all of which will negatively impact the Euro should the UK's Gross Domestic Product show that the economy returned to growth in the first 3 months of 2012. If the ONS report reflects positively on UK GDP then it is possible that we could see Sterling/Euro push towards a 41-month high around the 1.2400 mark in the near future. However, if the report shows stagnation or worse for the UK economy, then expect the Pound to Euro exchange rate to fall back down to around 1.2000 where technical resistance levels are strong. Heads Up:
Summary of major upcoming data releases that we think may move the market. | Date | Time | Issuing country/region | Data Item | Market Expectation | Market Sensitivity | | | | | | | | | April 23rd | 08:00 | EUR | Italian Consumer Confidence (April) | 96.2 | | | April 23rd | 08:00 | EUR | Eurozone PMI Manufacturing (April) | 48.1 | | | April 23rd | 08:00 | EUR | Eurozone PMI Services (April) | 49.3 | | | April 23rd | 09:00 | EUR | Eurozone Government Debt-GDP ratio (2011) | 87.2% | | | April 25th | 08:30 | UK | Gross Domestic Product (QoQ) (Q1 2012) | 0.1% | | | April 26th | 12:00 | EUR | German Consumer Price Index (YoY) (April) | 2.0% | | | | | | | Sensitivity | | | | | | | Medium | | | | | | | High | | 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 
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