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Weekly Market Update 30-03-2011

Weekly Market Update 30-03-2011

Old Mar 30th 2011, 3:40 pm
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Default Weekly Market Update 30-03-2011

GBP/EUR
Range of the week: 1.1408 (Today) – 1.1317 (Tuesday)
Variance of the week on £10k = €91

The theme of this week still lies with the sudden turn around in UK sentiment since hopes of interest rises in the first quarter were dashed when the Bank Of England voted to hold rates at their current low of 0.5% earlier this month. The split amongst the members of the MPC remained in tact at 6-3 (March). February’s split of 6-3 meant that any hopes of a rate rise in the first half of this year were dissolved as we would have needed to see a tighter disparity between those in favour and those against. A 5 to 4 split could have proved crucial for Sterling but the fact remains the economy is not moving fast enough to justify a rise this early in the year.

Europe on the other hand have had growth forecasts revised higher as opposed to the UK, justifying a rate rise as early as next week (A large number of investors are betting on a rise by the ECB next Thursday) where sentiment has softened with growth expected little above 1% this year (For the UK).

Unemployment for the Eurozone has also broken a 3 month stalemate when figures for January showed an unexpected drop.
Maybe it’s no surprise then that the £ has come under a lot of pressure recently as the unemployment rate for the UK has hit one of it’s highest levels since the 1980’s.

Summary:
• Growth forecasts for EZ UP, growth forecasts for UK DOWN
• Unemployment for EZ DOWN, unemployment for UK UP

GBP/USD
Range of the week: 1.6082 (Today) – 1.5936 (Monday)
Variance of the week on £10k = $146

The small move in rate over the week is evidence of little news coming from our friends in the States. Investors attentions have been shifted to oil price and war. The continued conflict in Libya and other African and Middle Eastern countires and the uncertainty around how long the U.N etc will be involved has caused oil price to bounce around elusively.

On the whole, absolutely every reason to be excited still. Still over 11% up from this time last year and a whisker the recent 14 month high.

With uncertainty never more so prevalent as the first few months of this year, do clients really want to throw away what could be one of the best rates this year? (Disclaimers as always please)

Interesting fact: Only 2 currencies has the £ hit 12+ month highs against this year, the U.S Dollar being one of them. (Other being NZD)

GBP/AUD
Range of the week: 1.5650 (Tuesday) – 1.5483 (Today)
Variance of the week on £10k = AUS 167

Edging closer to the lows of recent memory (1.5140 Jan 3rd 2010), the OZ Dollar continues to climb high over most major currencies as global economics forecasts and results come out more optimistic, leading to commodity rich nations benefiting from higher demand.

GBP/NZD
Range of the week: 2.1340(Monday) – 2.1050 (Today)

Having seen a drop off of almost 7.5% in little more than a week and a half from it’s 13 month low against the £ (13 months high for £ sellers) the NZ Dollar joins the likes of the Rand and OZ Dollar. As global forecasts for growth and production continue to improve, the demand for commodities also increase.

GBP/ZAR
Range of the week: 11.02 (Tuesday) – 10.92 (Today)
Variance of the week: on £10k = ZAR 1000

Same story with the other commodity currencies, improved global forecasts increases demand for commodities.

GBP/CAD
Range of the week: 1.5650 (Tuesday) – 1.5530 (Today)
Variance of the week: on £10k = CAD 120
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