Posted tagged ‘currency’

Clegg Puts Spanner in Election Race

April 16, 2010

The pound fell broadly early this morning on the foreign exchange market.  Why?

Last night the three main political parties took part in a television debate, with Liberal Democrats leader Nick Clegg winning the majority of audiences.  While Gordon Brown (Labour) and David Cameron (Conservatives) may have been expecting an easier ride, Clegg used his moment in the spotlight to appeal to viewers and the studio audience with what he hoped was a fresh approach.

But while the Lib Dems might be enjoying their newfound popularity stakes, it does throw a spanner in the works for the outcome of the general election.  With Clegg’s new level of support, the other parties will once again be left in a very similar bracket – meaning a hung parliament is back on the cards.

Once again, investors are wary of the pound.  Once again, the election race takes a new and interesting twist.

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4th Quarter GDP Better than Expected

March 31, 2010

Tuesday brought some surprising news for economists: fourth quarter growth figures were revised upwards!  Now, it seems the UK economy grew by 0.4% and what is more, this was the final revision.  Having started with a minute 0.1% , we now know that the country exited the recession faster than had been thought!

However according to another survey consumers are still worrying about the economic outlook for the country.  In March, consumer confidence fell somewhat yet the risks of a double-dip or ‘W’ shaped recovery are still not significant.

Some accused media hype surrounding Alistair Darling’s latest Budget announcement as the reason for consumer fears.  Around his announcement, much was made over Britain’s large deficit and the Chancellor’s lack of drastic plans to clear this debt quickly (he currently plans to halve it in four years).

The pound edged up on the good GDP news.

Euro Saved by Greece Bail Package?

March 26, 2010

EU leaders have reached an agreement to help Greece with a package of €22 billion.  The country, with a vast deficit which is eating on the euro currency has, in the past months, been at the centre of EU debates.

While the currency exchange market was speculating on Greece’s future and that of some other Eurozone countries, the euro took enormous pressure.  Indeed, there were even record amounts of euro -selling from international investors, enough to make a few EU leaders call for an end to over-selling and the damage that speculation can do.

Now, Greece will receive a boost to fix its problems, but is it enough?  Currency investors certainly seemed to be mollified by the news as the euro rose by around half a cent on the news against the US dollar and by nearly half a penny against the pound.

Pound Stable…for Now

March 11, 2010

The pound managed to stay flat against the US dollar and the euro in this morning’s trades, as currency exchange traders lost momentum on sterling sell-off.

However, more weakness is forecast for the pound…here are some the reasons why:

Gordon Brown VS David Cameron – no clear winner

The upcoming general election looks set to result in a ‘hung parliament’ – a situation which means no party is a clear winner over the other.

Weak UK Economy

It seems as though fresh data is announced every week, and lately much of it isn’t exactly ideal.  The most recent numbers to cause investors to avoid the pound were those showing worse-than-expected manufacturing output.

Poor Public Finances

Actually, the deficit in the UK isn’t that far off from that of Greece.  Gordon Brown has now called for civil servant pay freezes – but is it enough to stem the problem?

Sarkozy – Public Display of Support for Greece

March 8, 2010

Greece got a boost from French President Nicolas Sarkozy yesterday, after talks between himself and Greek Prime Minster George Papandreou.

So far, EU leaders have been less than enthusiastic about helping Greece in a big bailout package.  Luckily for them, the country does not (so far) need a package, having already announced austerity measures to tackle the massive 12.7% deficit problem.

Mr Sarkozy attacked speculators on the foreign exchange market and on the bonds market, for attacking the euro.  Indeed, in recent months the amount of positions against the euro reached record levels.  However, after the French President’s comments, the currency took a boost and rose against the US dollar.

Are speculators going too far, or are they right to avoid the single currency as Greece – and possibly other EU nations – struggle to tackle their major fiscal problems?

Greece Unveils Austerity Plan

March 4, 2010

Investors were slightly mollified yesterday, leading to a rise in the euro against the US dollar.  The reason?  Principally, it was due to Greece’s unveiling of plans to put its economy back on track.  It plans to do so by introducing VAT rises, public sector cuts and other austerity measures to try and reduce the deficit from 12.7% to 8.7% within 2010.  Will they manage it?

The euro has really taken a strain thanks to the Greek Problem, while other european nations have been edging close to a similar situation.  Investors have therefore been largely cautious around the eurozone single currency.

Meanwhile, the pound is still enjoying a slight respite thanks to positive PMI and other economic data.

Improvement for UK Economy?

March 3, 2010

What’s all this?  Good news for the pound?  Surely not…

Yes, today the pound rose against the US dollar and the euro after some positive data concerning the UK economy was released.  According to recent surveys and indices, consumer confidence has risen to its highest level in two years, while the services sector is reporting notable improvement.

Consumers, while still cautious about buying large household goods, are now confident abouth the next 6 months – so much so that the index measuring this has risen to its highest point since 2004!  Looking at today’s numbers it is no surprise that investors headed back to the pound.

Indeed, the data was even better than expected – most economists had predicted much more moderate figures.  In addition, GDP growth rose to 0.3% for the final quarter of 2009 (not 0.2% as had been previously thought).  Overall it certainly looks like Britain has some hope on the horizon!

Yet only earlier this week, investors on the foreign exchange market were shaking their heads whenever the word ‘Britain’ was mentioned – after all, with a ‘hung’ parliament looking like a real risk and public debts still nearly as bad as those of Greece, the pound wasn’t looking like a particularly safe bet