The Pound made small gains against the Euro while declining against the Dollar yesterday on the dovish comments from Bank of England members. BOE members mentioned the benefits of maintaining a weak sterling in order to increase growth for the economy, indicating that the currency will stay weak for the near term. BOE’s decision last week, to leave their quantitative program unchanged, suggests that the UK is still under inflationary pressure and further stimulus may be needed.
The Dollar declined against the Pound while making small gains against the Euro despite disappointing consumer confidence data. US consumer confidence came out less than expected, at a mere 46.0 after a rise of 56.5 in the previous month and 55.0 forecasted. Still ahead, new home sales, durable goods, and jobless claims data are scheduled to be released later this week, with forecasts to be favourable. New homes sales is forecasted to increase from the previous 342k to 353k (-7.6 percent last month to 3.1% this month), while durable goods data is expected to increase1.5 percent compared to the 1 percent increase from the previous month. Despite yesterday’s setback on US consumer confidence, the greenback is holding up well due an unexpected decrease in Europe’s business confidence data. With mounting crises issue coming from the Eurozone, the US dollar will remain steady due to its safe-haven status.
The Euro declined against the Pound and the Dollar after a report showed an unexpected decline in German business confidence, the first decline in 11 months. IFO business climate index indicated a fall to 95.2 from 95.8, with a forecast of 96.1 in January. The index reached a 26 year low of 82.2 last March. With sustaining manufacturing activity in Germany, IFO report was forecasted to improve. The continue disappointing data from the Eurozone has lead market participants to be more risk cautious.
This morning’s rates
GBP/EUR 1.1402
GBP/USD 1.5432
EUR/USD 1.3530
Data released 24th February 2010
UK: 09:30 BoE MPC board panel discussion
EU: 10.00 EU Ind. new orders
US: 15:00 New Home Sales
