Weekly Currency Update GBP/USD - Week ending 22nd October
Oct 26th 2010, 9:56 am
#1
BE Enthusiast
Thread Starter
Joined: Dec 2004
Posts: 524
Weekly Currency Update GBP/USD - Week ending 22nd October
Last week we entered the dawn of a new decade according to our Governor of the Bank of England – the sober decade!
Finally the coalition Government unveiled their plans on how to cut £81bn from the deficit by FY 2014/2015, which helped by a severe bout of managing expectations over the past few weeks, went relatively smoothly.
Given the size of the existing debt the good news was that the rating agencies approved the steps to reduce the debt and significantly we saw the yield of 5-year gilt prices drop below that of their German counterpart (a vote of confidence from the markets in the ability of the UK government to meet its debt obligations). Cheaper for the UK to borrow money than Germany – this is quite unusual and considering that the UK spent £44bn servicing debt last year it is also quite economical!
Otherwise we had a 3-way decision at the last MPC meeting with seven members voting to leave rates on hold and the outliers being Sentance and Posen, with the former voting for a 25bps rate hike and the latter voting for a further £50bn of quantitative easing.
From now on investors will carefully watch fresh releases of economic data to see which side the coin will land on in terms of rate increases or further quantitative easing.
Since the minutes we saw the release of retail sales for September which showed the volume of sales on the High Street disappoint expectations by falling by 0.2%. 1-0 for the QE camp.
The highlight this week will be Q3 GDP from the UK on Tuesday and the US on Friday, both key.
GBP/USD movement – High’s & Low’s of last week (18th October– 22nd October)
High’s: 1. 6006
Low's: 1. 5649
A movement of 2.28%
Difference on £200,000
High: USD 320,120
Low: USD 312,980
Difference of: USD 7,180
Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.
Regards
Mark Bodega
Director - HiFX
Finally the coalition Government unveiled their plans on how to cut £81bn from the deficit by FY 2014/2015, which helped by a severe bout of managing expectations over the past few weeks, went relatively smoothly.
Given the size of the existing debt the good news was that the rating agencies approved the steps to reduce the debt and significantly we saw the yield of 5-year gilt prices drop below that of their German counterpart (a vote of confidence from the markets in the ability of the UK government to meet its debt obligations). Cheaper for the UK to borrow money than Germany – this is quite unusual and considering that the UK spent £44bn servicing debt last year it is also quite economical!
Otherwise we had a 3-way decision at the last MPC meeting with seven members voting to leave rates on hold and the outliers being Sentance and Posen, with the former voting for a 25bps rate hike and the latter voting for a further £50bn of quantitative easing.
From now on investors will carefully watch fresh releases of economic data to see which side the coin will land on in terms of rate increases or further quantitative easing.
Since the minutes we saw the release of retail sales for September which showed the volume of sales on the High Street disappoint expectations by falling by 0.2%. 1-0 for the QE camp.
The highlight this week will be Q3 GDP from the UK on Tuesday and the US on Friday, both key.
GBP/USD movement – High’s & Low’s of last week (18th October– 22nd October)
High’s: 1. 6006
Low's: 1. 5649
A movement of 2.28%
Difference on £200,000
High: USD 320,120
Low: USD 312,980
Difference of: USD 7,180
Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.
Regards
Mark Bodega
Director - HiFX
