Daily Foreign Exchange Market Update 24/11/2011

Thu, November 24, 2011

The Pound finished yesterday having gained against the Euro, but fell slightly against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate picked up from the morning’s open at 1.1569 to trade up at 1.1617 by the close of the UK business day. The GBP/USD exchange rate however, fell from the morning’s open at 1.5569, trading down at 1.5517 by the end of the day. The main market focus for the UK yesterday was on the release of the minutes from the last meeting of the Bank of England’s Monetary Policy Committee (MPC). The minutes revealed that the committee saw no need to further increase the programme of quantitative easing beyond its current level of £275 billion. There were concerns expressed over the lack of growth in the UK economy, whilst the MPC continues to see inflation falling dramatically next year as the effect of the VAT increase and rises in the cost of energy fall out of the figures. There was some concern expressed though over the “material” increase in unemployment both in the private and the public sector; which saw the Pound experience some choppy movement within the market.

This morning will see the release of 3^rd quarter GDP figures from the UK, with the potential for any downward revision having the ability to affect the Pound heavily. The likelihood is though to see a level of 0.5% both annually, and quarterly, which would be considered by the market as ‘stable’.

The Euro slipped against both the Pound and the US Dollar across the course of yesterday’s trading in the currency exchange market. The EUR/USD exchange rate fell from 1.3457 at the morning’s open to trade at 1.3355 by the close of the European trading session. Yesterday saw the release of PMI figures from Germany for November, which saw manufacturing fall from 49.1 to 47.9, but services rise from 50.6 to 51.4. PMI figures for the Euro-zone as a whole saw manufacturing drop from 47.1 to 46.4, services rising from 46.4 to 47.8, and the composite figure also rising from 46.5 to 47.7, which in a way is positive for the region.

Today we have already seen the final reading of 3^rd quarter GDP from Germany, with the quarterly growth rate at 0.5% and annually at 2.5%, directly in line with market forecasts. Also crossing the wires were German IFO figures, with the readings as follows: business climate up from 106.4 to 1.6.6, current assessment holding at 116.7, and expectations up from 97.0 to 97.3.

The US Dollar did pull back against both the Pound and the Euro yesterday, gaining on worries about the current state of the markets across Europe. There was some positive data released from the US, with durable goods orders for October showing a gain from -1.5% to -0.7%, but the University of Michigan confidence index reading for November saw a fall from 64.2 to 64.1 amidst forecast for a rise.

There will be no data released from the US today; with it being a non-trading day due to the Thanksgiving holiday.

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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