Sterling still friendless, still losing ground | Smart Daily Currency Note

Sterling

January, so far, has been a terrible month for sterling and with limited data out this week to reverse this trend it looks set to continue. It was, as many had anticipated, a difficult morning for sterling on Friday as worse than forecast GDP data saw the currency loose further ground against its major trading peers. News that the British Economy had contracted 0.3% in the fourth quarter of 2012 saw sterling fall to a thirteen month and a five month low versus the euro and US dollar respectively. By early afternoon sterling had reversed most of its losses - recovering to 1.5827 against versus the dollar - although it remained at the lowest level since December 2011 versus its European counterpart. This morning we have opened down and close to 1.17 against the euro and below 1.575 against the US dollar. This week is relatively muted in terms of UK economic data, with the only major release on Friday being that of Manufacturing Purchasing Managers' Index (PMI). Having seen Manufacturing Production data come out considerably below forecast earlier this month, any contraction is PMI is likely to have a detrimental impact on the already fragile sterling. Call in now for the latest news and to get a live price from your trader.

Euro

The euro enjoyed a strong end to the week on Friday, strengthening against all but one of its major trading partners as improved economic sentiment began to creep back into the 17 nation currency bloc. News that the European Central Bank is expecting repayment of a larger amount of three-year loans than previously estimated increased demand for the currency. Coupled with better than forecast German Business Climate data, the euro rose to the a near eleven-month high versus the US dollar, hitting 1.3479 in the afternoon, whilst also reaching 0.8537 versus sterling by mid-morning. This week sees a host of market data released from the Eurozone, with German Consumer Climate information likely to give a further indication of economic health in the Eurozone's 'powerhouse'. The end of the week sees Spanish and Italian manufacturing PMI data, along with the latest unemployment rate for the bloc as a whole. Call in now to see how this information may impact currency, and for a live rate.

US dollar

The US dollar had a fairly muted day on Friday, with little data out, reacting mainly to news from its trading partners - most notably the disappointing British GDP data - rather than anything else. This week looks unlikely to be so calm however with influential data releases every day. Today, of particular note, is Durable Goods data, a key indicator of production followed by home sales data and we also have figures showing the number of homes pending sale. Later in the week, we have consumer confidence data on Tuesday and there is also a raft of employment related data released at the back end of the week, culminating with the highly influential non-farm employment data released on Friday. This is now particularly important given the link that the Federal Open Market Committee (FOMC) have expressly linked labour markets with monetary policy. The FOMC will also be making a statement on Wednesday following its latest decision on Monetary Policy. Furthermore we have preliminary GDP data released which is expected to show the economy grew by 1.3%. Get in touch now for the latest news and live rates. 

Worldwide

Elsewhere the biggest mover of the day was the Canadian dollar, falling to a near six-month low versus its US counterpart on the news that key Consumer Price Index inflation data had come out much lower than forecast at -0.6%. Coupled with news that economic growth in the country is likely to be slower than thought saw the currency also lose considerable ground versus the euro and sterling. There were also significant losses for the Japanese yen, paring many of the gains seen earlier in the week, as speculation began to increase that the Bank of Japan is under pressure to further expand economic stimulus in the economy. This week's major data releases sees the latest Reserve Bank of New Zealand's interest rate decision on Wednesday, followed by key Canadian GDP data on Thursday and Australian Producer Price Index information in the early hours of Friday morning. Call in now to get the latest update from your trader.