No respite and no support for sterling as it continues to weaken | Smart Daily Currency Note

Sterling

A terrible start to 2013 for sterling losing five cents against both the euro and the US dollar. And this week saw this continue with sterling dropping below the 1.18 mark against the euro  for the first time in 11 months, and  falling to a five month low of 1.5750 against the US dollar.  It has been a busy week in the UK, David Cameron's much anticipated speech revealed plans for a referendum in 2017 on the UKs continued EU membership. Monetary Policy Committee meeting minutes revealed that whilst there were no votes in favour of a change to interest rates, one member voted in favour of increasing the current the level of quantitative easing. We had poor manufacturing data earlier in the week and yesterday's figures showed that the relative level of current sales in January had fallen; but, by less than originally anticipated. Today's main announcement sees the preliminary fourth quarter GDP figures released which will give a clear insight into the current level of economic health in the UK and is currently forecast to show that the economy contracted by 0.1%. If this figure is confirmed, it will put increased pressure on credit rating agencies to cut the UK's gold plated AAA credit rating whilst putting added pressure on sterling. Call in now for a live rate and to see how this release could affect you.

Euro

The euro faired relatively well this week reaching 11 month highs against sterling and remaining range bound against the US dollar despite Spanish unemployment reaching record highs - overall jobless rate is at 26% and youth employment is at 55%. Euro-area wide services and manufacturing Purchasing Managers' Index (PMI) also disappointed the markets; but, traders seemed to have taken the lead from the better than expected German figures supporting the euro. Earlier in the week German Economic Sentiment came out considerably better than forecast and moreover, the European Central Bank President suggested late on Tuesday night that the worse of the region's debt crisis may be over. Europe takes its lead from Germany once more today with the highly influential German Business Climate data released. Although the there is little other data coming out, the euro could have another positive day due to the effects of economic climates around the world. Call in now for a live market quote and an update on the Eurozone in general.

US dollar

The US dollar had a slow start to the week with US markets closed on Monday in observance of Martin Luther King day as well as President Obama’s inauguration ceremony. During the week the US House of Representatives voted in favour of suspending the Debt ceiling limit until May 19 to avoid a default in the short term. Sales of existing homes in the US came out worse than expected; but, the reading still left total sales in 2012 at the highest level in the last five years. The weekly unemployment claims report was much better than expected, reinforcing the sentiment that the labour market in the US is recovering.  Today see's the release of important residential data which will show the number of new homes sold in the last month.  The US dollars seems to be performing well as Obama begins another four years in the Oval office, call in now to see how the US dollar is expected to fair over the coming months. 

Worldwide

The Japanese yen has continued to hog the spotlight this week, after a highly anticipated Bank of Japan meeting caused less waves than most had expected. The Japanese yen actually saw some strength return following the news that the Bank of Japan had set a new inflation target at 2.0% but made clear that it would delay introducing the unlimited monetary easing through additional asset purchases until 2014. Perhaps in reaction, yesterday, the Japanese economy minister said that he considers further weakening to be beneficial and that USD/JPY hitting 1/100 would not be a problem. Worse than forecast export results supported his suggestion, and the yen fell around half a percent against the US dollar. The Canadian dollar dropped to a near 10 week low against the dollar as the central bank help interests rates this week and looks less likely to implement an interest rate hike in the near future. The South African rand continued to fall this week, hitting a four year low as the central bank left interest rates unchanged and appeared to indicate that a weak rand wasn't necessarily a bad thing. The Danish krone had a strong end to the week following the news that the Danish Central Bank had raised interest rates by 0.1%. Call in now to see how the market is trending.