Daily Foreign Exchange Market Update

Thu, January 26, 2012

The Pound finished higher against both the Euro and the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate picked up from 1.1930 at the morning’s open to trade up at 1.1995 by the close of the UK business day, with the GBP/USD exchange rate also advancing from 1.5556 at the day’s open to trade up slightly at 1.5569 at the European market close. Economic data released from the UK yesterday was mixed, with figures showing that UK gross domestic product fell during the fourth quarter from 0.6% to -0.02%, causing the currency pair to fall to the days low at 1.5530. A better than expected BBA loans for house purchases in December increased from 34,809 to 36,171, showing improvement in the housing sector and also managed to regain earlier losses against the US Dollar.

The Euro lost ground against the pound and the US Dollar in the currency exchange market yesterday. The EUR/USD exchange rate did fall from the mornings open at 1.3034 to trade at a low of 1.2930 during the day, but picked up back to 1.2977 by the European market close. Economic data released from Europe was positive overall, with German IFO business climate for the month of January increasing from 107.3 to 108.3. German IFO expectations for the month of January also came in better than expected increasing to 100.9 from 98.6

This morning we have seen German GfK consumer confidence survey for February increase from 5.7 to 5.9 this morning, along with French consumer confidence indicator for the month of January increase from 90 to 81. Later today we will see the Italian bond auction due at 10:00GMT.

The US Dollar lost ground against the Pound yesterday, and closed out the day having lost its early gains against the Euro. Economic data from the US was fairly mixed with pending home sales year on year from December decreased from 6.9% to 4.4% and the house price index for the month of November increased from -0.7% to 1.0%.

Yesterday the Federal Reserve FOMC kept interest rates at 0.25% and have decided to keep rates low until late 2014, with a inflation target of 2%. With Ben Bernanke making ground for further easing last night caused both Pound and Euro to gain significantly after hours, reaching a high of 1.5678 for the GBP/EUR pair and 1.3121 for the Euro

Today from the US we will look out for the US durable goods orders for the month of December, which is expected to decrease from 3.7% to 2.0% at 13:30GMT. We will also be keeping an eye on initial and continuing jobless claims along with new home sales.

This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rate, Currency Conversion & Foreign Currency Transfer specialists.

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