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Pound Sterling Forecast 04.09.12 – 07.09.12 – Still an extremely busy week ahead!
Despite the UK data so far being mixed but overall disappointing for September, ongoing global events are presenting some excellent buying opportunities on many of the more popular currencies we trade. GBPUSD is only a whisker away from a 3 and a half month high, GBPNZD is at a 3 month high, GBPAUD is at a 12 week high and GBPZAR is at a 3 year high!
GBP NEWS – The start of each month sees a snapshot of economic activity with the Purchasing Managers Index Surveys. Monday’s Manufacturing data was an improvement on July but still showed for August according to the survey, the sector shrunk. Yesterday we had Construction post an alarming 3 year low, although an administration error meant tomorrow’s Services data was published ahead of schedule this afternoon. The increase in activity in the Services sector provided some light relief and helped the pound make some small gains in afternoon trading.
So what next for the pound? Well these mixed signals continue to point to the Zig Zag economy Mervyn King referred to earlier this year. The general slowdown we are seeing globally is impacting the UK and anyone banking on sterling making strong gains against any currency should really start preparing for more losses. The economy is literally going backwards and with dark debt clouds whipping up more and more of a storm in Europe, it is difficult at present to see the light at the end of the tunnel. With more QE due at some point in the future it looks like the pound will be set for more losses in the future.
With no Services tomorrow, in the UK, the important data is the Halifax House Price release which could affect short term movements on the pound. With no QE expected Thursday we probably won’t see much affect the pound itself, but with so much focus on the ECB (European Central Bank) those interested in any currency transfers may wish to book something out today or early tomorrow to avoid disappointment.
Is the ECB’s word as good as its bond?
EUR NEWS – After weakening to 1.2860 against sterling over 6 weeks ago, the Euro has found support against a weak pound on the back of improved confidence in the single currency. This has stemmed from Mario Draghi, President of the ECB stating the ECB will do ‘whatever it takes’ to save the Euro. There has been lots of speculation in the last few weeks as to what this will take and the feeling is the ECB will announce some new form of bond buying. Spanish and Italian borrowing costs rose to dangerous levels earlier this year which spooked investors.
DATAWATCH – Tomorrow we have 10 year German Bund Auctions, 10 year Italian Auctions and 5 year Spanish Auctions. To finance day to day spending, governments around the world borrow money on a promise to pay back the money at a certain rate over a period of time. This impacts currency (particularly the Euro at present) because it shows investor appetite for investing in the region. If the bond auctions go badly the rate could fall, if it goes well, the Euro may find favour.
With all eyes on Mario’s actions and announcements Thursday, tomorrow could be a very good day to make preparations for Thursday. I would not be surprised to see movement of at least a cent in either direction on GBPEUR, and personally feel it would be in favour of the Euro.
Mario and the ECB’s decisions could affect movement on a range of currencies including the Kiwi, Aussie and Canadian Dollar. Friday sees a range of Industrial and Manufacturing Production data too.
The posts on this site are a snapshot of the kind of information we provide on a daily basis to our clients who need to make a currency transfer. If you are considering any transfers now or in the future it is well worth getting in touch as we can not only make you aware of all the events surrounding your trade, but also assist with an unbeatable commercial exchange rate.
I am happy to take any questions on any currency transactions personally at [email protected] or on phone via 01494 787 478. Please note my services are for corporate and private clients looking to move money internationally (from 1000 GBP up to multi million pound transactions) bank to bank and not for travel money or speculative investment purposes.
I look forward to hearing from you.
2012-09-04 13:33:25
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