Sterling still has very few friends | Smart Daily Currency Note

Sterling

Sterling struggled badly yesterday amid speculation that the Bank of England will cut its growth forecasts in today's Inflation Report. For the first time in 6 months the pound fell below the 1.56 mark against the dollar, and broke through 1.16 in the morning against the euro. The Bank of England is expected to say that inflation looks likely to remain above target for the foreseeable future, which hardly bodes well for a tightening of monetary policy, as a result, sterling could very well stay at least as weak as it is currently. Yesterday the Consumer Price Index data came out as expected with a 2.7% increase for the fourth consecutive month in January – inflation has remained at this high level now for the longest period since records began. Markets were little changed by the release and were more focused on speculations around today's important press conference held by Bank of England Governor upon the release of  the Inflation Report. Volatility is often experienced during these speeches as observers try to solve the subtle indications regarding future monetary policy and the BOE's future interest rate decisions. Call in now for the latest news and rates. 

Euro

The euro had a fairly good day yesterday, strengthening against both sterling and the US dollar. The President of the ECB’s speech to the Spanish parliament encouraged Eurozone confidence as he applauded Spain's economic progress suggesting that Spanish banks were showing positive data following a rescue plan as the country continues towards economic recovery. Not much data is due to be released today; but, with lots of data out the US there is still the potential for a lot of movement in the markets. The markets will also look ahead to the G20 summit on Friday which is set to feature detailed discussions regarding currency manipulation. Call in now to for a live market quote and further news and analysis. 

US dollar

The US dollar struggled yesterday, weakening off against the vast majority of its major counterparts; but, did reach a 6 month high against sterling of 1.557 before falling back in the afternoon. The US dollar struggled following comments from the  Federal banks Vice-Chairwoman who said that  the central bank will use “forceful action to increase the pace of economic growth and job creation.” President Obama was speaking late last night and it will be interesting to see how the markets react following his comments today; however, it is likely that the Treasury secretary’s speech at 3pm today will cause a lot more volatility as his speech looks to communicate the US President's economic policies. There is also a raft of data out of the US today including retail sales figures, crude oil inventories and a benchmark 10-year bond auction. Call in now for the latest update and a live price from the market. 

Worldwide

The big story elsewhere was, once again, the Japanese yen. The G7 released a statement condemning the recent currency war, highlighting Japan, saying that there are only losers in a fight to actively depreciate currencies. The Yen jumped 1% on the statement. After news agencies reported a successful North Korean nuclear test, appetite for riskier assets plummeted, weakening currencies like the South African rand. The Australian dollar also hit the lowest rate against the US dollar since October as traders anticipated a rate cut by the Reserve Bank of Australia. There is little in the form of influential data released today, the Bank Holiday for Chinese New Year will likely keep trading volumes low in the east so expect volatility as trades move the market more dramatically - especially as traders take positions ahead of tomorrow's anticipated Press conference and monetary policy statement in Japan. Get in touch now for the latest news on your currency.