September 2005
Inter-bank
Updated Thursday 1st September 2005
GB Pounds / Euro 1.4579/ 0.6859
Euro / GB Pounds 0.6837/ 1.4627
GB Pounds / US Dollar 1.8085
US Dollar / GB Pounds - 1.8136
Sterling held near the previous session's
two-week low against the euro and three-week low versus the dollar on
Thursday as house price data added to concerns about weaknesses in the
British economy.
House prices fell 0.2 percent on the month in August taking the annual
rate of increase to its weakest in more than nine years at 2.3
percent, the Nationwide Building Society said.
Data on Britain's manufacturing sector is due out at 0830 GMT and the
Purchasing Managers Index is seen almost steady at 49.4 in August from
July's 49.2.
At 0740 GMT sterling traded at 1.4601 steady on the day. A fall beyond
1.4585 would bring sterling to its lowest level since Aug. 15.
Sterling was also trading near Wednesday's closing levels at $1.8020.
It hit a three-week low of $1.7801 on Wednesday before regaining
ground on dollar weakness.
Following August's interest rate cut -- the first from the Bank of
England in two years -- investors are eager for clues on the future
path of British rates.
Many had bet that the central bank would pause for a while before
cutting again but recent weak data releases have driven some to
rethink their bets.
Updated Friday 2nd September 2005
GB Pounds / Euro 1.4618/ 0.6840
Euro / GB Pounds 0.6819/ 1.4665
GB Pounds / US Dollar 1.8348
US Dollar / GB Pounds - 1.8396
Sterling hit its highest level against a
weakened dollar in nearly four months on Monday, while investors
focused on this week's Bank of England rate setting meeting.
The MPC is expected to leave interest rates unchanged at 4.5 percent,
after cutting borrowing costs for the first time in two years last
month.
Analysts are looking for any clues whether the BoE will continue
cutting interest rates in the future and when.
But for now, sterling was supported by renewed dollar weakness
stemming from speculation the Federal Reserve may pause in its rate
hiking cycle to assess the impact of the deadly Hurricane Katrina.
Currency trading was quiet because U.S. markets were due to be closed
for Labour Day.
"The case for further UK rate cuts is fair enough to make, bringing
down the rate differential between sterling and euro. This bias for
further BoE rate cuts is a negative for sterling and should install a
sell-sterling-into-strength strategy for the longer time," KBC
analysts said in a research note.
At 0730 GMT sterling traded a quarter percent up on the day at
$1.8452, after rising to its highest level since May 16 at $1.8475
earlier in the session.
It was up versus euro at 1.4720. The UK PMI index for the service
sector for August and provisional M0 data were due at 0830 GMT.
Updated Monday 5th September 2005
GB Pounds / Euro 1.4715/ 0.6795
Euro / GB Pounds 0.6774/ 1.4763
GB Pounds / US Dollar 1.8460
US Dollar / GB Pounds - 1.8507
Sterling hit its highest level against a
weakened dollar in nearly four months on Monday, while investors
focused on this week's Bank of England rate setting meeting.
The MPC is expected to leave interest rates unchanged at 4.5 percent,
after cutting borrowing costs for the first time in two years last
month.
Analysts are looking for any clues whether the BoE will continue
cutting interest rates in the future and when.
But for now, sterling was supported by renewed dollar weakness
stemming from speculation the Federal Reserve may pause in its rate
hiking cycle to assess the impact of the deadly Hurricane Katrina.
Currency trading was quiet because U.S. markets were due to be closed
for Labour Day.
"The case for further UK rate cuts is fair enough to make, bringing
down the rate differential between sterling and euro. This bias for
further BoE rate cuts is a negative for sterling and should install a
sell-sterling-into-strength strategy for the longer time," KBC
analysts said in a research note.
At 0730 GMT sterling traded a quarter percent up on the day at
$1.8452, after rising to its highest level since May 16 at $1.8475
earlier in the session.
It was up versus euro at 1.4720. The UK PMI index for the service
sector for August and provisional M0 data were due at 0830 GMT.
Updated Tuesday 6th September 2005
GB Pounds / Euro 1.4760/ 0.6775
Euro / GB Pounds 0.6757/ 1.4800
GB Pounds / US Dollar 1.8401
US Dollar / GB Pounds - 1.8450
Sterling initially fell against the dollar and the
euro on Tuesday after weaker-than-expected UK industrial production
data in July.
"The headline number was much weaker than expected and there was a
kneejerk move lower but sterling is coming back as the numbers also
show that manufacturing picked up," said Kamal Sharma, currency
strategist at Bank of America.
Overall industrial production fell by 0.3 percent in July from June
and fell 1.6 percent year-on-year compared with a forecast for no
change on the month and a 1.0 percent fall on the year.
However, manufacturing output unexpectedly rose by 0.1 percent in July
from June.
By 0841 GMT, sterling fell to a session low against the dollar of
$1.8410. Against the euro, it was trading at 1.4760, a fresh two-week
high for the pound.
Updated Wednesday 7th
September 2005
GB Pounds / Euro 1.4750/ 0.6779
Euro / GB Pounds 0.6756/ 1.4800
GB Pounds / US Dollar 1.8379
US Dollar / GB Pounds - 1.8418 Sterling stayed near the previous session's two-month
high against the euro on Wednesday and was firmer versus a weaker
dollar, with speculation about a takeover of a British firm continuing
to support the currency.
The pound has been boosted this week by anticipation of a large inflow
of pounds on news that E.ON, Europe's biggest utility by market value,
said it was considering a cash offer for Britain's Scottish Power.
"I think sterling is driven by dollar weakness and M&A stories,
including Scottish Power ... and that underlying sterling demand also
seems to support it against the euro," said Commerzbank currency
strategist Carsten Fritsch in Frankfurt.
E.ON <EONG.DE> said on Monday it may bid for Scottish Power <SPW.L>
but it has made no approach to the firm's board and there can be no
assurance that a transaction will be forthcoming. Scottish Power is
valued at around $19 billion.
An additional boost on Wednesday came from Halifax house price data
showing British house prices rose by 1.6 percent in August, giving a
three-month annual rate of increase of 2.5 percent. The monthly gain
was its biggest in almost a year.
The house price data comes as the Bank of England kicks off its
monetary policy meeting on Wednesday, with analysts expecting the bank
to keep interest rates unchanged at 4.5 percent after last month's
easing.
"We don't expect another rate cut ..., but there is still the risk
that rates might be cut again at some point if the economy should slow
further," Fritsch said.
Investors will also scan British Retail Consortium shop figures for
August due out today, for further clues on retail spending.
Inter-Bank
GBP/EUR 1.4750
EUR/GBP 1.4795
GBP/USD 1.8375
USD/GBP - 1.8420
GBP/AUD - 2.3935
GBP/NZD - 2.6002
GBP/CAD - 2.1860
GBP/CYP - 0.8430
GBP/AED 6.7520
GBP/ZAR 11.661
Updated Thursday 8th September 2005
GB Pounds / Euro 1.4780/ 0.6766
Euro / GB Pounds 0.6743/ 1.4830
GB Pounds / US Dollar 1.8360
US Dollar / GB Pounds - 1.8410 Sterling
stayed near the previous session's two-month high versus the euro on
Thursday and steadied against the dollar as investors awaited the Bank
of England's decision on interest rates later in the day.
Britain's central bank began its monetary policy meeting on Wednesday,
with analysts expecting it to keep interest rates unchanged at 4.5
percent after last month's easing.
The rate decision is due at 1100 GMT.
"It's very hard to imagine that they will do anything other than keep
interest rates unchanged this time -- the tone of the minutes from the
last meeting and the quarterly inflation report certainly haven't been
preparing the market for a cut," State Street Global Markets
strategist Ryan Shea said.
The BoE said in its quarterly inflation report last month that the
economic growth outlook in Britain had weakened slightly in the near
term but inflation was seen moving above its two percent target.
By 0800 GMT, sterling was steady on the day versus the euro at 1.4770,
near a two-month high hit on Wednesday at 1.4800.
Sterling was flat against the dollar at $1.8361.
Analysts said that while they didn't see the BoE cutting rates this
month, there could well be another easing on the cards either later
this year or early 2006, which would dull the pound's yield potential.
"With markets...not fully taking into account the possibility that the
BoE might deliver a further 25 bp rate cut in November.
GBP/EUR should definitely move lower over the next couple of weeks and
months -- I wouldn't be surprised if we can get back up to around the
70 level / 1.4300 over the next three months," Shea added.
The pound has been boosted this week by anticipation of a large
sterling inflow after E.ON, Europe's biggest utility by market value,
said it was considering a cash offer for Britain's Scottish Power <SPW.L>.
Scottish Power is valued at around $19 billion.
Updated Friday 9th September 2005
GB Pounds / Euro 1.4780/ 0.6766
Euro / GB Pounds 0.6743/ 1.4830
GB Pounds / US Dollar 1.8355
US Dollar / GB Pounds - 1.8404 Sterling fell
around 20 ticks against the dollar and ticked lower versus the euro on
Friday after data showed Britain's goods trade gap with the rest of
the world widened more than expected in July.
The global goods gap widened to 5.076 billion pounds from 4.167
billion pounds in June, more than the 4.7 billion forecast. "The
figures look pretty bad and herald a structural bear trend for
sterling," said Audrey Childe-Freeman, European economist at CIBC
World Markets. By 0837 GMT sterling fell to $1.8340 from levels above
$1.8360 before the data.
Against the euro it fell towards the day's low near 1.4759.
E.ON said on Monday it may bid for Scottish Power but has made no
approach to the firm's board. Scottish Power is valued at around $19
billion.
The pound showed little reaction to the decision by the Bank of
England on Thursdsay to leave interest rates at 4.5 percent.
Updated Wednesday 14th September 2005
GB Pounds / Euro 1.4822/ 0.6746
Euro / GB Pounds 0.6728/1.4862
GB Pounds / US Dollar 1.8224
US Dollar / GB Pounds - 1.8264
After the large loss on GBP-USD 1/1.5% on Monday GBP claimed back a
very small part of those losses, the future of GBP-USD is very
uncertain with Katrina figures very uncertain.
GBP-EUR is still (in the words of some analysts) puzzlingly strong,
and does still have a very big downside risk no-one can really figure
out why we are where we are we just have to accept that we are for
now.
GBP-AED has lost most of the gains I made last week
GBP-CAD and GBP-AUD have both started losing the very large gains they
made last week
Updated Friday 16th September 2005
GB Pounds / Euro 1.4756/ 0.6776
Euro / GB Pounds 0.6758/ 1.4796
GB Pounds / US Dollar 1.8080
US Dollar / GB Pounds - 1.8120
Updated Monday 19th September 2005
GB Pounds / Euro 1.4830/ 0.6743
Euro / GB Pounds 0.6720/ 1.4880
GB Pounds / US Dollar 1.8040
US Dollar / GB Pounds - 1.8090 Sterling hit a 3-week low against the dollar on
Monday after Bank of England policy market Stephen Nickell said there
was a "serious risk" the British economy would not recover as strongly
as the bank had forecast.
Sterling rose against a weaker euro, which was battered after
elections in Germany failed to provide an outright majority to any
political group, dimming prospects of reform in Europe's biggest
economy.
In an interview in the Financial Times published on Sunday, Nickell
still forecast that the economy would bounce back and said the future
course of interest rates depended on whether that came to pass.
"All in all, those comments were on the dovish side. It adds to the
general tone of sterling weakness against the dollar," said Ian
Stannard, currency strategist at BNP Paribas.
The BoE cut interest rates for the first time in two years in August
to 4.5 percent from 4.75 percent. The minutes of the central bank's
September policy meeting, when rates were kept on hold, will be
released on Wednesday.
A survey released overnight showed British house price inflation
continued to ease in the last month but the number of house sales rose
sharply, probably helped by August's interest rate cut, in a sign the
property market slowdown may have come to an end.
Property website Rightmove said house prices fell by 0.4 percent in
the Aug 7 to Sept 10 survey period from the prior month, bringing the
annual rate of inflation down to 1.6 percent from 2.1 percent in the
prior survey.
The average asking price for a property fell to 195,407 pounds from
196,282 in the last survey.
The Royal Institution of Chartered Surveyors' measure of the housing
market for August is due to be released at 2330 GMT. It showed prices
falling at a slower pace in July.
I feel now is a great time to get on the back of a n uncertain period
in Germany with a weaker Euro.
Updated Tuesday 20th September 2005
GB Pounds / Euro 1.4815/ 0.6750
Euro / GB Pounds 0.6725/ 1.4869
GB Pounds / US Dollar 1.8020
US Dollar / GB Pounds - 1.8070
Sterling ticked up against the dollar on Tuesday
while it held steady on the euro, shrugging off a positive UK house
prices survey as the market awaited an interest rate decision from the
U.S. Federal Reserve.
The pound hit a three-week low against the dollar on Monday after
dovish comments from BoE Policy Committee member Stephen Nickell
fanned talk of an interest rate cut later this year.
Nickell is due to speak again on Tuesday at 1630 GMT.
Investors were also sidelined before the Fed's rate verdict. The Fed
is expected to raise interest rates for an 11th straight time when it
announces the decision at 1815 GMT.
"Sterling will continue to follow the euro in the absence of data,
until Nickell speaks again today. The Fed's interest rate decision
will be also closely watched," said Adrian Hughes, currency strategist
at HSBC.
A survey from the Royal Institute of Chartered Surveyors showed house
prices fell at the slowest pace in almost a year in August, while
enquiries from new buyers shot up after the BoE's rate cut revived
confidence in the housing market.
The BoE cut interest rates for the first time in two years in August.
UK public sector net borrowing data and mortgage lending figures, have
both been released this morning.
Investors are also awaiting Wednesday's release of minutes from the
Bank of England's policy meeting in September when it held interest
rates steady at 4.5 percent.
Updated Wednesday 21st September 2005
GB Pounds / Euro 1.4800/ 0.677
Euro / GB Pounds 0.6725/ 1.4849
GB Pounds / US Dollar 1.8060
US Dollar / GB Pounds - 1.8105 Sterling
extended gains against the dollar on Wednesday after minutes from this
month's Bank of England policy meeting revealed a unanimous vote to
hold rates steady.
All nine members of the BoE's Monetary Policy Committee voted to keep
interest rates at 4.5 percent this month, minutes of their Sept. 7 and
8 meeting showed.
By 0902 GMT, sterling stood at $1.8113 , up 0.70 percent on the day,
after rising from $1.8078 just before the minutes came out. Against
the euro, sterling remained down around a quarter percent at 1.4800.
"As far as the minutes are concerned, they are far more neutral than
the market had hoped, not as dovish," said Ian Stannard, currency
strategist at BNP Paribas.
This is therefore could be better news for sterling than previously
thought.
Updated Thursday 22ed September 2005
GB Pounds / Euro 1.4800/ 0.677
Euro / GB Pounds 0.6725/ 1.4849
GB Pounds / US Dollar 1.8060
US Dollar / GB Pounds - 1.8105
Updated Friday 23ed September 2005
GB Pounds / Euro 1.4705/ 0.6800
Euro / GB Pounds 0.6734/ 1.4849
GB Pounds / US Dollar 1.7850
US Dollar / GB Pounds - 1.7900 Sterling fell one percent on the day yesterday to
three-week lows against the dollar and also hit two-week lows against
the euro on Thursday on weak UK data and talk of a large merger deal.
The Confederation of British Industry said its monthly manufacturing
order books balance improved to -27 in September from -29 in August
but still showed sharply falling orders. Economists had forecast a
reading of -25.
The data turned the focus back to a possible cut in UK interest rates
from the current 4.50 percent, after news in the previous session that
the Bank of England Monetary Policy Committee voted 9-0 for steady
rates in September.
"The data suggests that the situation in the manufacturing sector is
not improving significantly," said Lorenzo Codogno, European economist
at Bank of America.
"It is becoming increasingly clear that the economy will slow down
more than people have anticipated and that is negative for the pound.
There is a good chance we will see another rate cut in November."
But sterling also fell against both the dollar and the euro due to
large corporate flows, traders said.
Merger activity was cited as one possible reason for the decline,
after shares in Spanish oil company Repsol climbed 3 percent on talk
UK rival BP would make a bid.
"There is some flow going through, but whether the Repsol rumour is
correct or not is unclear," said Stuart Ritson, currency strategist at
Rabobank.
It is clear decisions need to be made on purchasing your currency
before the pound slides further in the currency markets.
Inter-Bank
GBP/EUR 1.4709
EUR/GBP 1.4758
GBP/USD 1.7850
USD/GBP - 1.7900
GBP/AUD - 2.3500
GBP/NZD - 2.5820
GBP/CAD - 2.0915
GBP/CYP - 0.8410
GBP/AED 6.5585
GBP/ZAR 11.3215
Updated Monday 26th September 2005
GB Pounds / Euro 1.4700/ 0.6802
Euro / GB Pounds 0.6779/ 1.4750
GB Pounds / US Dollar 1.7712
US Dollar / GB Pounds - 1.7760
Sterling fell to a new seven-week low against the
dollar on Monday as lower oil prices reduced fears of weaker U.S.
economic growth and increased the chances of more interest rate hikes
by the Federal Reserve.
Oil prices retreated after Hurricane Rita caused less damage than
expected and cemented expectations that the Fed would continue to
tighten monetary policy.
Rising U.S. interest rates would widen the gap vis-a-vis British
rates, which are expected to kept on hold or even slashed on growth
worries, and underpin support for the dollar.
The Fed raised overnight rates last week to 3.75 percent and said
Hurricane Katrina's damaging hit to the economy would not pose a
"persistent threat", repeating that more monetary tightening was
needed.
"Net-net, with questions still lingering over UK economic growth and
slowdown in the retail sector, there is still a possibility that Bank
of England may end up cutting rates," said Simon Derrick, head of
currency research at Bank of New York in London.
"It's a dollar story today and the key factor driving it is interest
rate expectations," Derrick said.
The minutes of last policy meeting of Bank of England, released last
week, showed that all nine members of the monetary policy committee
voted to keep rates at 4.5 percent.
The dollar rose to a two-month high against the the euro on Monday as
retreating oil prices reinforced investors' expectation that the Fed
would keep raising rates
We are now seeing a third day of losses for sterling against the USD
and EURO, it may be best to lock in now before any further losses
occur in the rates.
Updated Tuesday 27th September 2005
GB Pounds / Euro 1.4680/ 0.6811
Euro / GB Pounds 0.6788/ 1.4730
GB Pounds / US Dollar 1.7660
US Dollar / GB Pounds - 1.7710 Sterling fell to its lowest level against the dollar
in almost two months on Tuesday, in line with a rise in the U.S.
currency.
Revisions to British Bankers' Association figures on mortgage lending
are due at 0830 GMT but rarely draw great attention from the market.
Business investment data for the second quarter will be published at
the same time.
By 0800 GMT sterling traded at $1.7650, down 0.7 percent on the day,
after hitting $1.7620 earlier in the session, its lowest level since
early August.
It was 0.15 percent down on the day at 1.4700.
"Amidst fading optimism about economic growth prospects, sterling
looks fairly bad and above 1.4680 today will ensure further sterling
underperformance," Ian Gunner, head of foreign exchange research at
Mellon Bank wrote in a note.
This is now a fourth day of sterling weakness especially for USD
buyers, where the drop is rapidly gathering pace.
Updated Wednesday 28th September 2005
GB Pounds / Euro 1.4661/ 0.6821
Euro / GB Pounds 0.6798/ 1.4710
GB Pounds / US Dollar 1.7649
US Dollar / GB Pounds - 1.7698
Updated Thursday 29th September 2005
GB Pounds / Euro 1.4661/ 0.6821
Euro / GB Pounds 0.6798/ 1.4710
GB Pounds / US Dollar 1.7649
US Dollar / GB Pounds - 1.7698
Sterling dipped to the day's
lows against the dollar on Wednesday and edged lower against the euro
after final UK growth data for the second quarter showed the weakest
annual pace of economic growth in 12 years.
Q2 GDP rose 0.5 percent on the quarter, unchanged from the previous
estimate. But strong UK data in the previous session had raised
expectations for a 0.6 percent gain. The annual gain was unexpectedly
revised down to 1.5 percent from 1.8 percent.
Sterling weakened to $1.745 at 0840 GMT, from levels above $1.7670
just before the data, and eased to 1.4685 on EURO.
Meanwhile, the UK second quarter current account gap narrowed to 3.05
billion sterling, against forecasts for a 4.8 billion sterling
deficit.
The Confederation of British Industry's distributive trades survey for
September is due at 1000 GMT.
Although sterling has steadied slightly from previous days weaknesses,
I feel vulnerability still remains in the market for sterling.
Updated Friday 30th September
2005
GB Pounds / Euro 1.4635/ 0.6835
Euro / GB Pounds 0.6814/ 1.4685
GB Pounds / US Dollar 1.7645
US Dollar / GB Pounds - 1.7694 Sterling rose more than a quarter cent versus the
dollar and hit the day's highs versus the euro on Friday after the
release of consumer confidence data for September.
The GfK consumer confidence index weakened to -5 in September from -4
in August, below forecast but better than some last-minute
expectations after several weak UK data releases this week.
"The fact that sterling has bounced, I'm not sure is particularly
logical. I still see sterling pushing lower," said Daragh Maher,
senior currency strategist at Calyon.
"The way the MPC will see this is that there has been a further
deterioration of confidence."
Sterling rose to $1.7605 by 0939 GMT from levels around $1.7554 just
before the data, and two-month lows of $1.7549 hit earlier in the
London trading session.
It strengthened to the day's highs of 1.4630, off earlier four-week
lows of 1.4600
Sterling has lost more than 3 cents against the dollar this week as
markets increasingly speculate about further UK rate cuts, following a
quarter-point cut in August to 4.5 percent. If this occurs it is sure
to dampen sterlings strength.
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