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The pound falls to a 4 month low against the euro
Published: 1 Aug at 9 AM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Canadian Dollar Exchange Rate, Euro Crisis, UK, Economy,
Ahead of today’s monthly policy announcements from both the Bank of England (BoE) and European Central Bank (ECB), the pound fell to trade at a 4 month low against the euro.
The BoE are expected to implement the policy of ‘forward guidance’ championed by new governor Mark Carney who used the policy to great success during his tenure as Governor of the Bank of Canada. The policy sets out to ensure both the money markets and consumers that any tightening of policy like a rise in interest rates should not occur in the foreseeable future thus stimulating economic activity and growth.
In UK data out yesterday, the GfK consumer confidence index improved in July from – 21 in June to -16 against an expected figure of -19.
Nick Moon, Managing Director of Social Research at GfK, commented that “There is now no doubt that consumer confidence has recovered strongly from the unparalleled trough of the last five years.”
Strong US data out yesterday saw the US dollar strengthen across the board. The ADP report showed that private-sector employers added a total of 200,000 jobs in July, a gain on June’s figure of 198,000 and much better than the consensus estimate of 180,000. Better still, US economic growth for the second quarter of 2013 came in at an annualised rate of 1.7%, well up from the 1.1% rise seen in June.
This compares more than favourably to UK growth of just 0.6% in the same period.
Nevertheless, last night the Federal Reserve maintained its huge bond-buying programme despite predicting a pick-up in the growth rate of the US economy. The Fed maintained that it would hold its key interest rate at near zero and keep buying $85 billion in bonds every month to help lower long-term interest rates.
The Federal Reserve said the economy "expanded at a modest pace during the first half of the year" adding that "The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline".
Overnight, data from China showed that its huge manufacturing sector saw mixed fortunes in July, underlining concerns of a slowdown in its economy with the official Purchasing Managers' Index (PMI), which surveys bigger firms, rising from 50.1 in June to 50.3 in July.
However, HSBC's PMI data, which tracks smaller firms, fell from a figure of 48.2 in June to 47.7 in July. This is the third month in a row the HSBC reading has been below the key level of 50 points.
Figures released in early July showed that China, now the second largest economy in the world grew at an annualised rate of 7.5% in the second quarter of 2013, down from a growth rate of 7.7% in the first quarter.
The BoE are expected to implement the policy of ‘forward guidance’ championed by new governor Mark Carney who used the policy to great success during his tenure as Governor of the Bank of Canada. The policy sets out to ensure both the money markets and consumers that any tightening of policy like a rise in interest rates should not occur in the foreseeable future thus stimulating economic activity and growth.
In UK data out yesterday, the GfK consumer confidence index improved in July from – 21 in June to -16 against an expected figure of -19.
Nick Moon, Managing Director of Social Research at GfK, commented that “There is now no doubt that consumer confidence has recovered strongly from the unparalleled trough of the last five years.”
Strong US data out yesterday saw the US dollar strengthen across the board. The ADP report showed that private-sector employers added a total of 200,000 jobs in July, a gain on June’s figure of 198,000 and much better than the consensus estimate of 180,000. Better still, US economic growth for the second quarter of 2013 came in at an annualised rate of 1.7%, well up from the 1.1% rise seen in June.
This compares more than favourably to UK growth of just 0.6% in the same period.
Nevertheless, last night the Federal Reserve maintained its huge bond-buying programme despite predicting a pick-up in the growth rate of the US economy. The Fed maintained that it would hold its key interest rate at near zero and keep buying $85 billion in bonds every month to help lower long-term interest rates.
The Federal Reserve said the economy "expanded at a modest pace during the first half of the year" adding that "The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline".
Overnight, data from China showed that its huge manufacturing sector saw mixed fortunes in July, underlining concerns of a slowdown in its economy with the official Purchasing Managers' Index (PMI), which surveys bigger firms, rising from 50.1 in June to 50.3 in July.
However, HSBC's PMI data, which tracks smaller firms, fell from a figure of 48.2 in June to 47.7 in July. This is the third month in a row the HSBC reading has been below the key level of 50 points.
Figures released in early July showed that China, now the second largest economy in the world grew at an annualised rate of 7.5% in the second quarter of 2013, down from a growth rate of 7.7% in the first quarter.
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Source: moneytransfer.co.uk