Outlook improves in the Eurozone
The Euro made some solid gains yesterday against the USD breaking the 1.30 barrier as the markets digest the results of the European bank stress tests on Friday. Initial views were sceptical and clarification is still needed on the exposure of Deutsche Bank to the eurozone sovereign debt so until this is announced further gains may be unlikely.
Market sentiment has improved due to several market indicators coming in better than expected including the GFK Consumer Confidence Survey in Germany which came in above expectations this morning marking an 8 month high. The US has also posted some better than expected data yesterday as new home sales for June came in much better than the terrible May figures. Markets will be looking to the housing data released today to provide a better look at the state of the US economy with the housing sector still in such a weak state.
BP announce record losses of $17bn for Q2 and a massive provision of $32.2bn for the Deepwater Horizon disaster may be looking to sell up to $30bn of assets. This comes along side the already expected announcement that CEO Tony Hayward will be stepping down after his PR nightmare during the disaster and will be replaced by American Bob Dudley.
Treasury Minister Mark Hoban announced a new proposal for the Bank of England to obtain new powers over the financial services sector and the financial system as a whole with plans for the new unit to meet at least 4 times per year with the intention of monitoring risk as well as banking products and credit regulation. This is all the start of the new coalition governments plans to scrap the FSA and pass the responsibility onto the Bank of England. Some have attributed the continuing decline in house prices to the increased tightening of fiscal policy.
Sterling seems to have run out of the steam created by the unexpected second quarter GDP figures after achieving 5 month highs against the USD yesterday morning helped by an increase views on global growth. We do not have any data out for the UK until the back end of the week so the Pound will be relying on data from the US and elsewhere to hopefully point to a global recovery and the increased risk appetite this will bring.
But what does all this mean to you? Speak to Currency UK to find out.