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(Please note these rates were taken at 9:30am GMT, rates do fluctuate every 2 – 3 seconds)
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If you need any other exchange rates then please don’t hesitate to contact me.
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GBP/USD traded higher with risk sentiment yesterday but GBP underperformed compared to the other risky currencies (with the exception of SEK). GBP remains resilient against EUR and will likely hold below the key resistance around the 0.8390-0.8400 area in the absence of any positive news from the Greek PSI discussions. The negative print in Q4 GDP and expected announcement of further QE will likely weighing on sterling performance during risk positive moves, however GBP will hold up well should risk sentiment turn subdued today. The Treasury will on Friday publish plans for a radical overhaul of financial regulation that will hand the Chancellor new powers to take charge in a crisis, rein in the might of the Bank of England, and provide extra protection for consumers. The new Financial Services Bill will be put to Parliament on Friday morning alongside a memorandum of understanding between the Treasury and the Bank that will set down how the authorities should respond to another financial crisis. It will make clear that responsibility lies with the Chancellor whenever taxpayers’ money is put at risk to avoid a repeat of the Northern Rock fiasco when Alistair Darling found he could not order the Bank to act, The Telegraph says. David Cameron and Boris Johnson were caught up in a new round of cross-Channel tensions yesterday after the favourite to replace Nicolas Sarkozy as President of France threatened to scupper the EU’s economic rescue plan and undermine the City. François Hollande, the socialist tipped to win power in May, set out a manifesto that declared war on financial services and promised to rip up the EU’s fiscal treaty, due to be approved on Monday. The Prime Minister, the Mayor of London and British business chiefs were taken aback by Mr Hollande’s plans, claiming that they would damage financial centres. Mr Johnson accused him of “political vindictiveness”, The Times explains.
Meanwhile, talks in Greece are ongoing. The head of Institute of International Finance (IIF), Charles Dallara, is to meet with Greek Prime Minister Lucas Papademos in Athens again today to discuss a debt-swap deal. According to Greek newspaper Ethnos, the IIF is now willing to accept a coupon rate for new Greek bonds of 3.75%, despite earlier demands of a rate no less than 4%. Elsewhere in the Eurozone, in a move which some are describing as the most significant since the country was frozen out of international debt markets last year, the Irish National Treasury Management Agency (NTMA) yesterday offered to swap investors’ holdings in the country’s short-term debt. Some observers seem to believe that the move may benefit from the ECB’s long-term refinancing operations. EUR/USD continued higher yesterday morning, but struggled overnight as the risk positive momentum faded. Markets will likely turn their attention to Greece and Europe now. While good US numbers this afternoon could provide some support to risk sentiment, the market will likely need to see a positive outcome from negotiations on the Greek PSI before we see EUR/USD break higher. Lloyds TSB expect EUR/USD to struggle today after a week of gains and will likely hold below the 1.3200 level as the market waits for news from Greece.
The Fed, which had previously said it would maintain the federal funds rate between 0% and 0.25% until mid-2013, announced yesterday that it intends to leave them as they are until late 2014. According to the Federal Open Market Committee (FOMC), “economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” While the move fuelled a strong showing by US stocks last night, some noted that the decision reflected the central bank’s concerns over economic growth: one economist from RBC Capital Markets (Tom Porcelli) was quoted as saying that “this drives home one important fact, the Fed is scared.” Today attention remains on the US with the release of the first estimate of Q4 GDP. There has been a noticeable improvement in US economic indicators in the final quarter of 2011. This has been broad-based, with activity, consumer and business sentiment and labour market data generally printing stronger than expectations. And notwithstanding this week’s softer house sales data, the housing market has also improved. Reflecting this, annualised Q4 GDP growth is predicted to be slightly above 3% in the final quarter of 2011, up from 1.8% in Q3 and the fastest since Q2 2010. However, a key upward contribution in Q4 will come from a rebound in inventories. This is unlikely to be repeated in H1 2012, indicating a slower pace of expansion ahead. Nevertheless, Lloyds TSB have raised their forecast for US 2012 GDP growth to 2.6%, from 2.2% previously. Lloyds TSB believe the main downside risk to the outlook comes from an intensification of tensions in the euro area which could damage returning consumer and business confidence. A stronger-than-expected rebound in business and residential investment is the chief upside risk, reflecting potentially strong pent up demand.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The author(s) cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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