Pound gains after last weeks decline
Last Week
A week to forget for Sterling - Last week saw massive losses for the pound as Sterling hit a 13 year low against a basket of currencies. The pound lost more than 5% against the Euro and the US Dollar reaching an all time and 6 year low respectively. This is caused by a weak UK economy, and expectations of further drastic cuts in interest rates by the Bank of England.
Today the pound has stages a recovery of sorts, gaining 2% on the US Dollar and 1.4% on the Euro. Beware though, over the last 12 months spikes such as these tend to be fairly short lived, and the outlook for the pound remains poorm, with most analysts expecting further falls in the pound.
Other data today and this week:
UK
Jobless data and the effects of the recession will be worse than expected, according to the CBI. This may well weaken the pound further. The UK’s recession will be tougher and longer than first thought, the business group CBI has warned. It estimates that the economy will shrink by 1.7% in 2009, a dramatic downgrade from the forecast of 0.3% growth the CBI gave in September.
USA
US bank Citigroup has announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made this year. Citigroup said the 75,000 job cuts represented a reduction of about 20% of its staff, leaving it with 300,000 jobs worldwide “in the near term”. The cuts will come from redundancies, the sale of units and natural wastage, the bank said. This has weakened the US Dollar, improving rates slightly today.
Data Releases that could affect your Currency Requirements
• Tuesday 18th 09:30 - UK - Retail Price IndexThis shows the level of inflation in the retail sector.
• Wednesday 19th - 09:30 – Bank of England MinutesThe minutes from the meeting this month could make for interesting reading as rates were slashed by 1.5%. Indications of further rate cuts could weaken the pound as investors move their funds in advance of a future decision.
• Wed 19th 13:30 - US - Consumer Price IndexThe change in the cost of goods (excluding food and Energy) can affect currency rates as a big increase may suggest an interest rate hike is necessary, although this is quite unlikely in the States.
This is a brief summary of todays report. Click here to read the full report on our main website
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