Daily Foreign Exchange Market Update 28/10/2011

Fri, October 28, 2011

The Pound finished yesterday lower against the Euro, but higher against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate fell from 1.1423 at the morning's open to trade down at 1.1350 by the close of the UK business day. The GBP/USD exchange rate however showed a marked pick-up from 1.6001 at the morning's open, to trade up at 1.6097 by the market close. There was some positive data released from the UK yesterday; with October's CBI reported sales number showing a surprise increase from -15 to -11, amid calls for a further drop to -16.

The early hours of this morning have already seen October's UK GfK consumer confidence numbers record a disappoitning fall once again. The reading fell from -30 to -32, which further reinforces the negative sentiment among the general public, amidst sharp government cutbacks, a worsening labour market and tightening economic conditions in the UK.

The Euro gained against both the Pound and the US Dollar in the currency exchange market yesterday, as it seemed that the market accepted the EU leaders resolution towards Greek debt and bank re-financing as a positive step. The EUR/USD exchange rate picked up markedly, from 1.4006 at the morning's open to trade up at 1.4180 by the day's close. There was some relief in the release of German CPI (inflation) figures, which showed the annual rate had fallen from 2.6% to 2.5%, which will go some way to ease any worries from the European Central Bank in regards to the negative effect of increased price pressures.

There is no significant economic data set for release from the Euro-zone today, leaving the currency open to shifts in risk sentiment and news from the world's other major economies.

The US Dollar lost the earlier gains it had shown against the Pound and the Euo yesterday, falling sharply on the news from Europe that EU leaders had at least agreed on a plan in principle. The negative risk sentiment that had seen the Dollar benefit from it's 'safe-haven' status eased off, and consequently the currency lost ground across the board. There was more negative news from the US; with pending home sales figures dropping from 13.1% to 7.9% month-on-month, a further sign of weakness in the housing market.

Today will see the release of both personal income and spending figures from the US, but they are likely to be overshadowed by the release of the University of Michigan's confidence survey. The market forecast is for a small increase in the confidence number, but there is potential for an upset to the downside, as with consumer confidence numbers earlier in the week. Any sharp drops could put further downward pressure onto the Dollar, which could see it trade lower still.

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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