The Pound made small gains against the Euro and Dollar yesterday in the absence of any substantial economic data. The Pound remains under pressure on concerns that the Central Bank will be forced to continue measures to revive Britain’s economy as the US leads other nations in withdrawing emergency monetary stimulus. This Thursday’s Q4’09 preliminary GDP release is expected to show a slight quarterly increase (0.2%); however, the y/y release is still expected to show a significant -3.1% reading which would hinder the Pound.
The Dollar declined against the Pound while remaining relatively unchanged against the Euro as a disappointing Dallas Fed Manufacturing report (-0.1% in Feb. vs. 10.0% exp.), coupled with gains in US equities and other global stock markets, have damped demand for lower-yielding assets such as the US Dollar. All eyes will be closely attuned to the two key Fed commentaries this week: The first will be SF Fed President Yellen’s perspective on the economy; the second will be Fed Chairman Bernanke’s testimony to Congress on 2/24 regarding the recent decision to increase their Discount Rate.
The Euro declined slightly against the Pound while remaining relatively unchanged against the Dollar following news that Germany is preparing plans for Eurozone nations to assist Greece. The single currency fell to 9-month low after the Fed’s surprise move raising its discount rate. Earlier in the week, the euro had managed to stabilize as market jitters over a potential Greece debt default were soothed as E-16 nations pledged support. News that the Region’s PMI was above forecast at 53.7 in February also provided some relief to the euro, but the currency remains overshadowed by signs that the US economy is on firmer footing.
Data released 23rd February 2010
UK: 09:30 BBA Mortgage Approvals
UK: 11:00 CBI Distributive Trades
US: 14:00 S&P Case-Shiller Home Price
US: 15:00 Consumer confidence
