If the ECB were to raise rates quicker than the BOE this has the potential to weigh on the GBP against the EUR although it is worth pointing out that the Euro zone sovereign debt crisis has still not been fully extinguished.
While the ECB is universally expected to keep rates on hold at 1.0% today, the post-Council meeting Press Conference will inevitably be watched for President Trichet’s musings on the sovereign debt crisis and the Bank’s bond-buying program.
All eyes in the UK will be on tomorrow’s budget, with the Chancellor promising the pain will be spread around, and also promising that the budget will be a long term strategy covering the life of the parliament…
The Pound gained some support from the OBR report, and has managed to keep above 1.47 into this morning. Sterling has also managed to make some modest gains against the single currency, pushing up towards 1.21 even as the Euro itself benefited from some decent economic data…read more
Fitch has said that the UK faces ‘formidable’ challenges and needs a more ambitious plan to cut the deficit, and these comments dragged the Pound down to 1.4350 against the Dollar, and towards 1.2050 against the Euro. Listening to a representative of Fitch on the radio this morning, the statement was intending to say that there needed to be a more ambitious plan for the deficit compared to the last budget in April…read more
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it may be that the large amount of currency moving through the markets has distorted the price somewhat and it may fall back to a more orderly pace, however the Pound has continued to edge upwards, albeit much more sedately and currently sits around 1.20, and 1.47 against the Euro and the Dollar respectively…read more
It’s been an eventful long weekend, with Spain’s credit downgrading, the first (but no doubt not the last) resignation from the coalition government…read more
Eurozone debt is a huge issue – to the extent that short selling bans have been put in place AND rumours of ECB interference in the FX markets has been heard. Today. 27/05/2010, we here that China is concerned over the issue and may beconsidering a sell off/diversification away from some of its Eurozone bonds… read more
For now the Pound seems to be holding onto it’s gains from the OECD optimism, and it is likely to manage to hold onto them throughout today…read more
The Pound actually got some good news with the GDP estimate for Q1 raised from 0.2% to 0.3%, based largely on a rise in manufacturing output, although a fair bit of this came from stock rebuilding. There was also the Queen’s speech yesterday, which set out the coalition government’s legislative agenda…read more