Sterling drops to two week low

Published: 22 May, 2012

Sterling was fairly range bound yesterday as very little data was released globally - but it weakened to a two week low against the euro.

Currency rates - May 22

EURO/GBP - 1.2374

US$/GBP - 1.5823

CHF/GBP - 1.4869

CAN$/GBP - 1.6079

AUS$/GBP - 1.5941

ZAR/GBP - 13.021

JPY/GBP - 125.73

HKD/GBP - 12.2810

NZD/GBP - 2.0651

SEK/GBP - 11.258

AED/GBP - 5.8038

US$/EURO - 1.2782

INR/GBP - 86.98

Consumer Price Index (CPI) figures released today will show the change in the price of goods and services purchased by consumers and are expected to show a drop from 3.5% to 3.1%. Furthermore, the Bank of England's inflation letter that follows will provide further insight into the potential for more quantitative easing in the near term. Other data to be released includes the Public Sector Net Borrowing figures which show the difference in value between spending and income for public corporations, the central government, and local governments during the previous month.

The euro trended weaker again yesterday as fears surrounding the future of Greece continued to dominate the minds of traders. The Spanish finance minister suggested that Spanish GDP figures in Q2 would show another contraction underlining the poor state of the economy. Consumer confidence is the main release in what is a light data for data in Europe. As per usual, the Spanish banks solvency troubles and the Greece situation will be centre stage in the financial world tomorrow as investors look to see if any sudden developments may occur.

The US dollar maintained its relative strength against the majority of currencies due to its "safe haven" status yesterday. A member of the Federal Open Market Committee (FOMC) suggested that further quantitative easing should still be considered and should be implemented if the economy continues to deteriorate. Existing home sales figures will be the main data on the agenda, whilst a member of the FOMC is also speaking.

Elsewhere, Chinese policy makers have suggested that they are willing to take further measures to boost its economy if deemed necessary.

http://www.youtube.com/watch?v=at1_TQv4EBI&feature=youtu.be

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