Smart Daily Currency Note | A brief respite for sterling?

Sterling

It was a mixed day yesterday for sterling; whilst certainly not seeing a revival versus its major trading peers, it was able to stem the significant declines it has been experiencing over the past few days. The British currency increased slightly versus the euro, although it continues to hover close to the key support level of 1.20; should it fall below here we could see sterling decline dramatically versus its European partner. News that key Consumer Price Index (CPI) inflation data had remained constant at 2.7% helped steady expectations that the economy was sliding further towards a contraction - albeit not alleviating fears altogether. The biggest shift of the day was focussed around the Japanese yen, where speculation that the currency has been excessively devalued saw it strengthen to a near two week high versus sterling. Today sees no major data released from the UK, so call in now to get a live price from your trader.

Euro

The euro's recent positive trend stalled yesterday as it approached the key psychological resistance level of 1.20 against sterling, whilst struggling to break through the 1.34 mark against the US dollar. Negativty in the eurozone spread as Germany's Federal Statistics Office showed that GDP in 2012 came out below expectations at 0.7%, much lower than the 3% seen in 2011, whilst also slashing its growth forecast to 1% for 2013. Highlights how business confidence slipped away last year as the Euro zone politicians prevaricated on how to sort out their debt crisis. Furthermore, records show that the economy shrunk by 0.5% in the 4th quarter of 2012; however, surprisingly this bad news didn't lead to any significant market impact. Today will see the release of inflation data from the Eurozone in the morning, with the CPI reading expected to remain stable at 2.2%. In a day with little data out, the benchmark 10-year German bond auction report could get a bit more attention, given it indicates the price of borrowing and following yesterdays news. Call in today to check with our traders to see how the euro if fairing and for a live price.

US dollar

The US dollar had a relatively stable day yesterday, recovering somewhat against the euro - peaking at 1.3310 - whilst remaining fairly range bound against sterling. Positive retail sales figures which came out yesterday morning helped support the US dollar which had been on a negative run against the euro. Other data released included the Producer Price Index (PPI) which showed a 0.2% deflation in prices. Late on Monday night, the chairman of the Federal Bank suggested that the economy remained fragile and that vigilance was paramount until the debt ceiling issue has been sorted. The key release today will be the Core CPI inflation data coming out this morning - this states the change in the price of goods and services purchased by consumers; of which is predicted to have a slight increase. To find out what impact this data may have upon the US dollar rate, call in now to speak to your trader.

Worldwide

Elsewhere, the big story came from Japan as the Economy Minister said that while a weak yen would boost exports, it could be harmful to people's livelihoods, reducing speculation that the government would look to weaken the currency even further. The Yen gained for the first day in nearly week on the news. As the outlook for the Eurozone looks up, the need for the Swiss franc as a safe haven currency has dropped, causing the currency to weaken. The South African rand continued to drop, hitting a 6 week low, as the largest platinum producer, a key export for the country, announced a halt to production at four of its mines. The  Norwegian krone also struggled yesterday as the central bank's Deputy Governor hinted that it may look to cut interest rates in the next central bank meeting due to the negative impact the strong krone is having on the economy. Get in touch now for the latest news and prices.