Sterling still has no friends and continues to weaken | Smart Daily Currency Note

Sterling

It was very much a mixed day for sterling yesterday, remaining distinctly range bound versus its major peers in the morning, before continuing last week's trend and losing further ground later on in the day. Ever increasing speculation that the impending Monetary Policy Committee meeting minutes will reveal increased expectation of fourth-quarter contraction in GDP, coupled with an expectation for a future inflation rise continued to dampen demand for the British currency. Having gradually approached 1.59 versus the US dollar by mid-morning, sterling lost ground falling to just above 1.58 by early evening. There has been a slight rebound this morning pushing up towards 1.585. It was a similar story versus the euro, touching a 10-month low at 1.1870 yesterday and falling even lower overnight. Despite this negativity for sterling, UK stock markets have rallied with the FTSE 100 reaching a 5 new year high. The main data released today sees the latest figures for Public Sector Net Borrowing, along with Industrial Order Expectations - likely to give a clear indication into the strength or lack of it of UK economic health. Should these come out worse than forecast, it is likely that sterling will continue to decline, so call in now for the latest news and a live price from your trader.

Euro

The euro continued on its relentless run against sterling yesterday, breaking through the 1.19 support level and reaching 1.1870, whilst having a relatively steady day against the US dollar. The Eurozone Finance ministers met yesterday and will meet once more today, but in contrast to the meetings towards the end of the 2012 there is much less of a sense of panic about these early 2013 gatherings. The Finance misters met to discuss the state of Europe and the Eurozone in general with focus on the continued discussions over a Cyprus bailout, although this may take some time to complete, while the aid programmes to Portugal, Ireland, and Spain’s banks will all be reviewed. Any comments from ministers about the strength of the euro will of course be closely watched given the Head of the Eurogroups view that its current levels were ‘dangerously high’, furthermore, the President of the ECB president is also due to speak early this afternoon. Call in now for a live market vote and to hear the outcome of these highly influential meetings.

US dollar

The US dollar traded in fairly narrow ranges yesterday with US markets closed in observance of Martin Luther King day as well as President Obama’s inauguration ceremony - trading volumes were noticeably reduced as a result. That being said, the US dollar did manage to strengthen to a near five-month high versus sterling whilst also weakening against the Japanese yen from its strongest level since June 2010 as the Bank of Japan started its two-day policy meeting in Tokyo. With businesses returning to work today, many eyes will be on the release of Existing Home Sales data - forecast to improve slightly - which will give a clear indication into the current level of economic health in the country. Call in now to see how this will affect the dollar and to get a live price from your trader.

Worldwide

Elsewhere, the Japanese yen took a turn for the better recovering from a two and a half year low against the US dollar and strengthening across all major currencies in anticipation of last night's first Bank of Japan meeting of the new Prime Minister Abe's term. Early this morning the Bank of Japan announced that it would be setting a new 2.0% inflation target but that it would delay introducing the unlimited monetary easing through additional asset purchases until 2014. The Japanese yen has strengthened since the announcement. The Swiss franc also had a good day yesterday, strengthening against most of its major counterparts as traders closed off positions to take profit following the marked sell off in the Swiss franc over the past week or so. The Swiss franc  recovered some of last week's heavy drop against the euro - where it weakened to 1.2569 - the lowest since a cap had been imposed on the franc against the euro. Today will also see core retail data from Canada which will be good insight into the state of the Canadian economy. A main factor in this data are sales figures from the automotive industry and therefore a key insight into current spending trends.  Call in now to see how the market is trending.