Sterling weakens after Moody's downgrades UK growth forecast

Published: 01 August, 2012

Sterling was particularly weak yesterday following the news that one of the big three credit rating agencies, Moody's had downgraded the UK's growth forecast.

Smart Currency rates - August 1

EURO/GBP - 1.2714
US$/GBP - 1.5668
CHF/GBP - 1.5286
CAN$/GBP - 1.5705
AUS$/GBP - 1.4902
ZAR/GBP - 12.9045
JPY/GBP - 122.61
HKD/GBP - 12.1618
NZD/GBP - 1.9283
SEK/GBP - 10.5877
AED/GBP - 5.7561
US$/EURO - 1.2322
INR/GBP - 86.97

Nationwide house price index data will be released today and is expected to mirror the data released from Hometrack earlier in the week which showed that house prices have dropped for the first time in seven months. Manufacturing Purchasing Managers' Index (PMI) figures will be the main release on the agenda and will give some indication of the relative health of the UK's economy.

The euro performed fairly well yesterday despite German retail sales missing expectations and Eurozone unemployment levels reaching new record highs. Euro wide Manufacturing PMI data is released today and is expected to show continued contraction across the vast majority of Europe. Expect the markets to be fairly tentative today ahead of the ECB press conference on Thursday where the pressure is firmly on the ECB President to deliver on his comments alluding to restarting the bond buying program.

The US dollar had a mixed day yesterday with renewed confidence following US consumer confidence figures coming in better than expected. Chicago PMI figures also came in better than anticipated and in turn, investors hope that the ISM Manufacturing PMI figures released today will show an industry expansion where the majority of the western world continues to contract. Other data released today includes figures showing the change in the number of employed people during the previous month, however, these figures are less influential than the non - farm pay roll data released on Friday. The Federal Open Market Committee's statement this evening could have a big impact on the market; however, at present no further quantitative easing is expected to be announced; but, instead more guidance is expected to be given on keeping interest rates low until 2015.

Elsewhere, building approvals data from Australia was better than expected and Canadian GDP data was weaker than anticipated posting a very slight growth figure of 0.1%. Overnight, Chinese PMI figures were released coming in slightly short of where markets had predicted.

To request a up-to-the minute Smart Currency quotation, call 0845 638 0571 or +44 (0) 207 898 0500 from outside the UK) or fill out our quote form

Printer friendly version