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Daily Foreign Exchange Market Update 12/10/2011

Wed, October 12, 2011

The Pound fell lower against both the Euro and the US Dollar in the foreign exchange market yesterday following some fairly disappointing economic data, and an anticipation of further negative new today. The GBP/EUR exchange rate fell from the morning’s open at 1.1472 down to 1.1416 by the market close. The GBP/USD exchange rate also came lower across the day, dropping from 1.5644 in the morning, to trade at 1.5597 by the close of the UK business day. Figures released from the UK yesterday showed that manufacturing production fell both annually and monthly, from 2.6% to 1.5% and from 0.2% to -0.3% respectively. Industrial production also dropped annually; from -0.9% to -1.0%, but there was a slight increase month-on-month from -0.4% to +0.2%. The latest NIESR GDP estimate for September did little to inspire any confidence in the currency despite a reading of 0.5%, up from the previous reading at 0.2%.

Today will focus solely on the UK’s labour market, with the expectation to see an increase in both the jobless claims number and claimant count rate for August; which could see the Pound lose further ground. More worrying though is the market forecast for an increase in the ILO unemployment rate for the 3 months to August, from 7.9% to 8.0%. With the prospect of further government cutbacks to come in the UK, a weakening jobs market could hinder any prospects of an increase in overall economic growth over the coming months.

The Euro gained against the Pound, and also advanced slightly against the US Dollar in the currency exchange market yesterday. The EUR/USD exchange rate finished the day trading at 1.3658, a slight improvement on the morning’s open at 1.3636. There was no significant economic data released from Europe yesterday, which may account for the fairly narrow trading range against the Dollar. There was some positive news for Greece though; with an agreement reached which will see the debt-stricken nation receive a further round of funding to try and enable it to find its feet once again.

Today will see the release of Augusts’ Euro-zone industrial production figures, with the expectation for a drop in both the annual and monthly level, which could see the Euro trade slightly lower, as the stronger nations within Europe such as Germany, do rely heavily on their industrial sector.

The US Dollar advanced against the Pound, but came slightly lower against the Euro yesterday. With no economic data of note released form the US yesterday; the slight drop against the Euro could be attributed to a small increase in market confidence towards Europe with Greece receiving access to further refunding, and the gain against the Pound due to poor economic data released from the UK.  

The Dollar could well take direction from the release of the minutes from the Federal Reserve’s last policy meeting later on today. The minutes should show the central bank’s reasoning behind diverting $400 billion to extending the maturity date of the securities it holds, and also should give some insight into the FOMC’s view in regards to economic growth and inflation over the coming months.

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

Data Releases

Day Time Currency Event
WED 09:30 GBP GBP Claimant Count Rate
WED 09:30 GBP GBP Jobless Claims Change
WED 09:30 GBP GBP ILO Unemployment Rate (3M)
WED 09:30 GBP GBP Average Weekly Earnings (3M/YoY)
WED 09:30 GBP GBP Weekly Earnings exBonus (3M/YoY)
WED 10:00 EUR EUR Euro-Zone Industrial Production w.d.a. (YoY)
WED 10:00 EUR EUR Euro-Zone Industrial Production s.a. (MoM)
WED 12:00 USD USD MBA Mortgage Applications
WED 15:00 USD USD JOLTs Job Openings
WED 18:15 USD USD Fed's Pianalto Speaks at University of Akron
WED 18:30 USD USD Fed's Plosser Speaks on Economy in Philadelphia
WED 19:00 USD USD Fed Releases Minutes of Sep. 20 FOMC Meeting

Foreign Exchange Rates

GBP/USD 1.5667
GBP/EUR 1.1407
EUR/USD 1.3734
GBP/JPY 119.95
GBP/CHF 1.4138
GBP/AUD 1.5591
GBP/CAD 1.6024
GBP/NZD 1.9839
GBP/SGD 2.0050
GBP/HKD 12.1967
GBP/CZK 28.170
GBP/PLN 4.9167
GBP/SEK 10.4161
GBP/DKK 8.4914
GBP/NOK 8.8615
GBP/THB 48.36
GBP/ZAR 12.2034

*These are indicative rates only, based on interbank prices at the time of writing. For exact rates please contact our dealing team

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