Sterling hits eight week low against euro
Sterling fell against the euro yesterday, hitting an eight week low, after Bank of England policymakers opened the door for further quantitative easing.
Sterling fell against the euro yesterday, hitting an eight week low, after Bank of England policymakers opened the door for further quantitative easing.
Currency rates & comments - June 29
EURO/GBP - 1.1111
US$/GBP - 1.6010
CHF/GBP - 1.3310
CAN$/GBP - 1.5663
AUS$/GBP - 1.5115
ZAR/GBP - 10.929
JPY/GBP - 129.73
HKD/GBP - 12.459
NZD/GBP - 1.9527
SEK/GBP - 10.236
US$/EURO - 1.4403
It suggests that the bank is sticking to its guns on inflation forecasting which it has argued for some time will spike this year before falling off. This left investors even more convinced that interest rates will remain at record lows well into next year. Sterling also touched a five month low against the US dollar before closing the day barely above $1.60/£1. In addition, the UK's 1st Quarter annual GDP was revised downwards to 1.6% from 1.8% which was a reminder of how slow the UK recovery is.
In the euro zone, with markets in a holding pattern awaiting a key vote in Greek Parliament to approve austerity measures and pave the way for key funding, investors chose to focus on a press conference with ECB President Jean-Claude Trichet. Trichet stated that the bank is in "strong vigilance mode," signalling that the ECB plans to increase interest rates in the region next week. As a result, the euro strengthened against both the US dollar and sterling which many will find baffling given the sheer state that Greek finances are in.
In the USA, house prices fell in the year end to April by the most in 17 months. The housing market is a major issue for the US recovery and today's figures showing a 4% drop on the year, combined with poor consumer confidence figures paint a gloomy picture of the US recovery. Consumer spending dropped also and markets are braced for Thursday's unemployment claims figures which could provide the nail in the coffin to a terrible week for data.
Elsewhere, the Swedish krona fell to a seven-month low against the euro after retail sales slumped. Data showed that the numbers fell by 1.1 % last month, and cemented the krona's position as the worst performing G10 currency over the last month - beating sterling to the wooden spoon position.
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