This week the city has been accused of artificially suppressing the value of the pound in a bid to express it’s displeasure over the increasing probability of a hung parliament. Although a hung parliament would not be disastrous, it is clear that the hedge funds and money market managers do not want to see another Labour government, and although they owe their existence to Gordon Brown’s years as chancellor, the value of sterling has definitely taken a beating as a result of his premiership.
This week was animated by the Greek sovereign debt issue and uncertainty about the UK election. 
Increased unemployment claims, further threat of job losses and the disagreement over the introduction of public spending cuts have prompted a sell off of the pound over the last 36 hours. Fridays trading opened with sterling a cent below the previous day's inter-bank average, with the rates teasing the 1.14 support level, and dropping to between 1.1350 and 1.14 following the release of January's retails sales figures. The pound has fallen amid fears that the British economy is showing more signs of stress as the year progresses.
Well what a week to have been part of the European dream!.
Even Freddie Kruger walking down Elm Street would have got a warmer reception than the way the Greeks have been treated. The ongoing saga reminds me of 2 things:
The release of the latest Consumer and Retail Price Indexes for December, the quarterly assessment of our economic growth (GDP) and the motivation behind the Bank of England’s monetary policy decisions at the start of January have all caused significant volatility for the pound versus the euro since the New Year, but have ultimately seen a gain for sterling. Price increases exceeded forecasts by 0.3% on both RPI and CPI, and despite a late surge in retail sales over the Christmas period it would appear that the UK economy is still the lame horse of the global recovery because of risk aversion and tighter regulation in the financial sector.
2009 has been a tumultuous year in the financial markets and a year to forget for the pound. Sterling started the year at all time lows against the euro and although we had a few sterling rallies, there was never the appetite to resurrect the pound. So where do we stand now against the euro and what will 2010 bring to the table?
So the pre-budget came and went and the economists and the politicians digested it in earnest. Naturally there was a heavy focus on the report due to the impending election and also the dire health of the UKeconomy. We saw a one-time 50% tax on bank bonuses that exceed £25,000- this expires on April 5 and does not include contractual agreements…lots of bonus payments to be made on April 6 then! Hard to know the intention here as it is easily sidestepped and avoidable and not likely to raise a jot to reduce the deficit or deter the bonus culture going forward.
Well November was not a good month for the pound as it transpired. Firstly the widely expected upward revision of UK third quarter GDP was disappointing- only nudging up by 0.1% from -0.4% to -0.3%; the expectation was that the revision could be to -0.1%. It was a case of buy the rumour and sell the fact as the value of the pound shot higher before the announcement only to deflate on release. This put a dampener on the pound and comments from the bank of England further devalued the currency.
Not a good week for the pound as it transpired. Firstly the widely expected upward revision of UK third quarter GDP was disappointing- only nudging up by 0.1% from -0.4% to -0.3%; the expectation was that the revision could be to -0.1%. It was a case of buy the rumour and sell the fact as the value of the pound shot higher before the announcement only to deflate on release. This put a dampener on the pound and comments from the bank of England further devalued the currency.
Well, only 39 shopping days left until Christmas and the question I keep getting asked is where I see GBP/EUR headed by then. I personally feel that GBP/EUR is in an upward trend however the language from the Bank of England is holding it back, trying to hold the pound low. After Christmas sterling could start to rally. 1.1500 is my short term target.
It was a huge week for sterling last week as the eagerly awaited Bank of England interest rate decision was announced on Thursday. The expectation in the build up was to maintain Interest rates on hold at 0.5% with the decision on QE to take the spotlight. As we drew closer the expectation escalated that the Bank of England would expand, the question was by how much?
September was a turbulent month for Gbp Euro, trading as high as 1.1365 and as low as 1.0660.Sterling seemed to suffer its annual wobble in confidence as conflicting reports in the UK press and comments from the Bank of England apparently favoring a weak pound to help UK exporters gave the currency markets a green light to sell the pound.
By Mark O'Sullivan from Currencies Direct - Overall an optimistic week for the currency markets, however, we did also have a few reminders to keep the optimists in check. The optimism commenced from last week’s US non-farm payroll figures which came in much better than expected after 19 months of deteriorating labour market data from the US – this strengthened the USD on rate hike expectations. This helped the UK FTSE index to move to 10 month highs in the market and supported the pound amid a difficult week of economic releases.
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Humidity: 87%
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