Economy grows by 0.5% in first quarter

This morning's GDP figures showed a 0.5% growth in the UK economy in the first 3 months of 2011.

The growth cancels out the contraction seen at the end of 2010, but means the UK economy has effectively not grown in 6 months.

While the numbers are nothing exciting in terms of the recovery, some analysts expected worse, so the Pound has taken a little strength from the news, gaining around a cent against both the USD and Euro.

Rates for buying US Dollars are now at their best since November 2009.

Currency news this week

Although we have a short week, there is important data out around the world likely to affect exchange rates. Particularly tomorrow we have the Q1 GDP figures for economic growth in the UK which is the main indicator of recovery for the economy.

Elsewhere we have news due out from the USA, Eurozone and Canada, New Zealand and Australia - whichever currency you are looking to buy or sell, contact Currency Index for the latest news and commercial exchange rates.

Tuesday 26th
1500 - US consumer confidence

Wednesday 27th
0230 - Australian CPI inflation
0700 - German consumer confidence
0930 - UK GDP
1730 - US interest rate decision
1915 - Speech: Federal Reserve chairman Bernanke
2200 - New Zealand interest rate decision

Thursday 28th
0855 - German unemployment rate
1330 - US GDP
2345 - New Zealand trade balance

Friday 29th
UK Bank Holiday
1000 - Eurozone economic & consumer confidence and unemployment rate
1330 - Canadian GDP

Currency Index bank holiday opening times

With Easter and the royal wedding coming up, Currency Index will be open at the following times. While many markets around the world will be closed over Easter, don’t forget that the bank holiday next Friday 29th only affects the UK, and therefore currency markets will still be active.

Monday 18th - Wednesday 20th: 9.00am - 5.30pm
Thursday 21st: 9.00am - 5.00pm
Friday 22nd - Monday 25th: CLOSED (Easter)
Tuesday 26th & Wednesday 27th: 9.00am to 5.30pm
Thursday 28th: 9.00am to 5.00pm
Friday 29th to Monday 2nd: CLOSED (Royal Wedding & May bank holiday)
Tuesday 3rd Onwards: as normal

Please call us on 0800 043 2623 (+44 1923 725725) if you have payments to make over the bank holiday periods.

Economic calendar this week

This week's 2 main events for the UK economy, and therefore the Pound, are Wednesday's Bank of England minutes (where we will find out how many of the 9-strong monetary policy committee voted for an interest rate rise this month) and Thursday's retail sales and public borrowing figures.

It looks like the Bank of England are now unlikely to raise interest rates in the coming few months, which has been sending sterling lower against most major currencies.

Monday 18th
1500 - Eurozone consumer confidence

Tuesday 19th
0230 - Australian interest rate minutes
0900 - Eurozone current account & purchasing inflation
1200 - Canadian CPI inflation

Wednesday 20th
0700 - German PPI inflation
0930 - Bank of England minutes
1500 - US existing home sales

Thursday 21st
0930 - UK retail sales, public borrowing & mortgage approvals
1330 - Canadian retail sales & US jobless claims
1500 - US house price index

Friday 22nd
Good Friday - bank holiday

UK unemployment falls... slightly

Sterling's tumble against the Euro has taken a pause for the last 24 hours, after UK unemployment figures were slightly better than expected yesterday morning.

Tomorrow we have important data in Europe and the USA, although nothing due out in the UK. Eurozone inflation figures are out at 10am, and in the States the same figures are announced at 12.30pm. Both are likely to influence monetary policy, and therefore exchagne rates for buying both Euros and Dollars.

Inflation falls - and takes Pound with it

The UK's headline inflation rate has fallen from 4.4% to 4% - making interest rate rises less likely and causing losses for sterling in FX markets.

The Pound has lost around a cent against both the Euro and US Dollar.

Tomorrow we have unemployment figures at 9.30am.

Currency news this week

A busy week ahead, which those of you sending money abroad will hope can give sterling some strength. The Pound has been stuck between a weaker US Dollar and stronger Euro for the last 2 weeks, with rates for buying USD now looking very healthy, while Euro rates are at their worst since October and still falling.

Tuesday is the busiest day for UK data this week, with the trade balance and key inflation data both released at 9.30am.

Monday 11th
UK: RICS house price balance; BRC retail sales monitor

Tuesday 12th
0700 - German CPI inflation
0930 - UK trade balance, RPI & CPI inflation
1000 - Eurozone & German ZEW economic sentiment surveys
1330 - US trade balace & import price index
1400 - Canadian interest rate decision
1900 - US budget statement

Wednesday 13th
0930 - UK unemployment rate & claimant count
1330 - US retail sales
1530 - Canadian monetary policy report

Thursday 14th
G20 meeting
0900 - Eurozone monthly budget report
1330 - US PPI inflation & jobless claims

Friday 15th
G20 meeting
1000 - Eurozone trade balance & CPI inflation
1330 - US CPI inflation

US Dollar rate reaches new highs

The weakening US Dollar has given us near the best exchange rates since the end of 2009 today, for anybody sending money to the USA.

The Euro continues to strenghten, despite the Portuguese bailout plans, which won't necessarily give us better EUR rates. When the Greek economy was bailed out last year, the Euro actually became more expensive, as these moves are seen as a sign of unity and strength in the Eurozone.

The Pound is also vulnerable to European problems, due to the UK's exposure to Eurozone banks and institutions.

Eurozone raise interest rates, as Bank of England holds on

The European Central Bank has today raised interest rates in the single currency zone, for the first time since July 2008, to 1.25%. The Bank of England in its own meeting today, has kept UK interest rates on hold at 0.5%.

The ECB's move was generally expected, and had been 'priced in' in advance to give a stronger (more expensive) Euro over the last couple of weeks. ECB President Trichet will now give a press conference explaining the move, while we will have to wait 2 weeks to discover how close the Bank of England came to raising UK rates today too.

Interest rates are a key driver of exchange rates, so to discuss the implications on your own transaction, contact us at Currency Index.

Currency news this week

This week's main economic news releases are the interest rate decisions in the UK and Eurozone on Thursday lunchtime. We expect the UK rate to remain unchanged at 0.5%, while the ECB may well raise rates to 1.25%. Speculation of a rate hike in Europe has led to the Euro gaining strength against sterling, giving worse exchange rates for buying Euros.

If you are looking to buy or sell Euros in the near future, contact Currency Index for the latest news. As Thursday approaches we may see some volatility and chances to buy or sell at preferential rates.

Monday 4th
0930 - UK construction PMI (Mar)
1000 - Eurozone PPI inflation (Feb)

Tuesday 5th
0015 - Speech: Ben Bernanke (US Federal Reserve Chairman)
0230 - Australian trade balance (Feb)
0530 - Australian interest rate decision
0930 - UK services PMI (Mar)
1000 - Eurozone retail sales (Feb)
1900 - Federal Reserve interest rate minutes

Wednesday 6th
0930 - UK industrial & manufacturing production (Feb)
1000 - Eurozone GDP (Q4 2010)
1500 - UK GDP estimate

Thursday 7th
0230 - Australian unemployment (Mar)
1200 - Bank of England interest rate decision
1245 - Eurozone interest rate decision

Friday 8th
0645 - Swiss unemployment (Mar)
0700 - German trade balance (Feb)
1200 - Canadian unemployment (Mar)

US employment figures boost dollar

Today's US 'non-farm payroll' figures - the main monthly measure of new jobs in the USA - came out better than expected at 216,000.

The American unemployment rate also dropped slightly to 8.8%.

As both of these measures boost confidence in the US economy, the Dollar has gained strength (become more expensive), with the market rate now back below $1.60 against sterling.

No good news for Pound

This week's lack of data releases has done nothing to help sterling, as speculation that the Eurozone interest rate could go up next week continues. In the absence of UK interest rate rises, the Eurozone base rate could leap further away, causing Euro strength and worse exchange rates for sending money to Europe from the UK.

If you have a requirement to send or receive foreign currency in the coming weeks, contact Currency Index who will be happy to keep you informed of the latest news and rates.

Currency calendar this week

This week we return to a little less important data as the month nears its end; although tomorrow's Q4 GDP revision in the UK is likely to be important. The Pound seems to have very little support at the moment, and fell significantly against most currencies last week.

Monday 28th
1230 - US consumption (Feb)
1600 - Speech: ECB President Trichet
2145 - New Zealand trade balance (Feb)

Tuesday 29th
0930 - UK mortgage approvals (Feb), net lending, business investment & GDP revision (Q4 2010)
1400 - US consumer confidence (Mar)

Wednesday 30th
1000 - Eurozone economic, industrial & consumer confidence (Mar)

Thursday 31st
0700 - German retail sales (Feb) & UK Nationwide house price index
0855 - German unemployment rate (Mar)
1330 - Canadian GDP (Jan)

Friday 1st
1000 - Eurozone unemployment rate (Feb)
1330 - US unemployment rate, average earnings & non-farm payrolls (Mar)

Retail sales down

This morning's retail sales figures have troubled the Pound further after a drop yesterday - February's figures were down 0.8%, and only showed a 1.3% increase over the last 12 months compared to expectations of 2.4%.

Sterling seems to have very little support at the moment, and there is no more major UK data expected this week.

No change from Bank of England

The minutes of this month's Bank of England meeting on interest rates showed the same results as February's vote: 3 of the 9 committee members voted for an interest rate rise in the UK, with the remaining 6 voting for no change.

With inflation running high we may still see a rate rise in the coming months, but while growth is still fragile it looks like the Bank remains cautious. The Pound fell when the news was announced, as markets look to higher interest rates to boost the value of the currency.

Next, we have the Budget announcement at 12.30 today.

UK inflation up to 4.4%

This morning's UK inflation figures have come out higher than expected, with the headline CPI rate now at 4.4%, up from 4% in January.

Retail prices, which include mortgage payments, are up 5.5% - the highest rate for 20 years.

Although this is not great news for consumers, it does mean that the Bank of England might be more likely to raise interest rates in the next few months, so the Pound tends to gain value in anticipation of interest rate rises. We have seen some small gains this morning against most major currencies, although with the Budget and Bank of England Minutes due out tomorrow, any gains may well be short lived.

Currency news this week

This week we have some crucial economic events in the UK - notably on Wednesday when the Chancellor releases ths budget at 1230, as well as the Bank of England minutes earlier in the morning. The UK's economic prospects and future interest rate policy will both be in the limelight, with immediate effects likely to weigh on the value of sterling.

Do keep in touch with your account manager at Currency Index to ensure you are not exposed to exchange rates moving against you during the week.

Monday 21st
Overnight - Rightmove house price index (March)
1400 - Speech: ECB President Trichet
1400 - US home sales (Feb)

Tuesday 22nd
0700 - Swiss trade balance (Feb)
0930 - UK inflation & public borrowing (Feb)
1230 - Canadian retail sales (Jan)

Wednesday 23rd
0930 - Bank of England minutes (Feb)
1230 - UK budget report
1400 - US new home sales (Feb)
2145 - New Zealand GDP (Q4 2010)

Thursday 24th
0930 - UK retail sales (Feb)
1230 - US durable goods sales (Feb) & jobless claims (Mar)

Friday 25th
EU economic summit
0900 - German business climate survey

Jobless total rises

This morning's labour market statistics showed a rise of 27,000 in unemployment to 2.53million at the end of January - the highest total since 1996.

The number of people claiming jobseekers allowance, however, fell to 1.45million.

The jobless rate of 8% is also the highest since 1996.

The Pound has been largeley unaffected, although better figures would have been likely to improve the outlook for the UK and therefore the Pound.

The only other important news due in the UK this week is public sector borrowing, announced on Friday.

This week's currency calendar

This week is relatively quiet for scheduled economic announcements, but the following all have the potential to move exchange rates. Contact Currency Index for the latest news and quotes.

Tuesday 15th:
1000 - German & Eurozone ZEW sentiment survey
1815 - US Federal Reserve interest rate decision

Wednesday 16th:
0930 - UK unemployment & average earnings (Jan)
1000 - Eurozone CPI inflation (Feb)
1230 - US PPI inflation (Feb)

Thursday 17th:
0830 - Swiss interest rate decision
1000 - Eurozone construction output (Jan)
1230 - US CPI inflation (Feb)

Friday 18th:
0930 - UK public borrowing (Feb) & mortgage approvals
1100 - Canadian CPI inflation (Feb)

Trade balance narrows sharply in January

Figures out this morning showed the UK trade gap is at its narrowest level for nearly a year, down to £7bn in January from £9.7bn in December.

Although good news for the UK economy, the figures are relatively volatile, so it is too early to say whether we are seeing a longer-term rebalancing of trade.

Tomorrow is a crucial day for sterling, with GDP estimate, industrial & manufacturing production, and the Bank of England's interest rate decision all released throughout the day.

Housing market stabilises, but retail sales fall

Today's 2 pieces of UK economic news were mixed - with RICS reporting some better stability in the housing market, but the British Retail Consortium showing the second weakest sales figures since May 2009.

The Pound remains vulnerable to any further negative news, with tomorrow's trade balance figures due at 9.30am.

Currency news this week

A busy week ahead, with the following data all with the potential to affect exchange rates:

Monday 7th
0930 - Eurozone investor confidence
1200 - Speech: ECB President Trichet

Tuesday 8th
Overnight - UK RICS house price balance
0030 - Australian business confidence
0645 - Swiss unemployment rate
1315 - Canadian housing starts
2330 - Australian consumer confidence

Wednesday 9th
0815 - Swiss CPI inflation
0930 - UK trade balance
1100 - German industrial production
2000 - New Zealand interest rate decision

Thursday 10th
0030 - Australian unemployment rate
0700 - German trade balance
0900 - European Central Bank monthly report
0930 - UK industrial & manufacturing production
1200 - UK interest rate decision
1330 - US trade balance
1900 - US monthly budget statement

Friday 11th
0700 - German CPI inflation
0930 - UK PPI inflation
1200 - Canadian unemployment rate
1330 - US retail sales

US labour market improves

The US Dollar has been gaining value this afternoon, after data showed unemployment down to 8.9% and 192,000 new jobs being created in February.

Rates for sending US Dollars are still excellent, but with this data and the uncertainty around the UK recovery, we may have seen rates peaking for the time being.

Eurozone interest rates "could rise next month"

Jean-Claude Trichet, the President of the European Central Bank, gave a clear indication today that Eurozone interest rates could go up as early as April, as the ECB kept rates at 1.0% at its March meeting.

Although fears over the costs of servicing debt in the likes of Portugal and Ireland may cause the Euro to weaken, overall if the Eurozone raise interest rates before the UK, analysts are convinced that the net effect will be positive for the Euro - and therefore negative for sterling.

If you are sending money to Europe in the foreseeable future, March might therefore provide some of the best opportunities to secure a rate for some time.

Positive data keeps sterling strong

Yesterday's data was generally good for sterling, giving exchange rates a little room to improve during trading through the day.

Tomorrow we have the Eurozone interest rate decision, so do think about securing rates today - after so much positive data in one day yesterday, is it likely that rates will improve further?

Yesterday's summary for the Pound:
- Nationwide survey showed house prices UP 0.3% in February
- Lending to individuals UP to £1.5bn in January
- Mortgage approvals UP above 45,000 in January
- Manufacturing PMI on target
- Money supply UP

Latest currency news - data out this week

This week we have a huge amount of important data releases likely to affect currency rates. If you are sending money abroad in the short or medium term, this week could be particularly volatile so get in touch with us at Currency Index to ensure we can make you aware of any opportunities to buy at preferential rates.

Monday 28th
1000 - Eurozone CPI inflation (Jan)
1330 - Canadian GDP & current account (Q4)

Tuesday 1st
0030 - Australian current account (Q4) & retail sales (Jan)
0330 - Australian interest rate decision
0645 - Swiss GDP (Q4)
0700 - UK Nationwide house price index
0855 - German unemployment rate (Feb)
0930 - UK money supply, individual lending, mortgage approvals & manufacturing inflation
1000 - Eurozone unemployment rate (Jan)
1400 - Canadian interest rate decision
1500 - Speech: Federal Reserve Chairman Ben Bernanke

Wednesday 2nd
0300 - Australian GDP (Q4)
0500 - UK Halifax house price survey (Feb)

Thursday 3rd
0030 - Australian trade balance (Jan)
0815 - Swiss retail sales (Jan)
1000 - Eurozone GDP (Q4) & retail sales (Jan)
1245 - Eurozone interest rate decision

Friday 4th
1330 - US non-farm payrolls & unemployment rate (Feb)

GDP revised down

This morning's revision to Q4 2010 GDP showed a disappointing contraction in the economy of 0.6%. The Pound quickly lost half a cent against both the Euro and US Dollar when the figures were released.

We have seen some revoery this afternoon, but with the European Central Bank poised to potentially increase interest rates next week, we could see Euro strength and worse rates for buying Euros during the first week in March.

Pound falls on Libya problems & weaker retail sales

Sterling is falling across the board today, as a CBI report showed weaker growth in retail sales, and global fears over the Libyan crisis also hit confidence.

Tomorrow morning we have the first revision of the disastrous GDP figures from Q4 last year, and unless the 0.5% contraction is revised to something more positive, we could see further losses for the Pound.

If you are worried about falling exchange rates, Currency Index can provide fixed and guaranteed rates up to 2 years ahead. Contact us for more details.

More policy-makers vote for interest rate rise

Today's Minutes of February's Bank of England interest rate meeting showed that 3 members voted for a rate rise this month, an increase from the 2 members who have been supporting a rise recently.

The Committee is made up of 9 members, with the other 6 voting for interest rates to stay at 0.5%.

The vote shows that there is increasing appetite for interest rate rises, which should help control inflation. Rate rises also tend to help the Pound, resulting in better exchange rates for sending money abroad.

The Pound has gained 0.5c against both the Euro and US Dollar this morning.

UK borrowing falls... but European confidence rises

This morning's UK public borrowing figures showed a surplus of £3.7bn, much better than expected, in a timely boost for the UK economy.

However, much of the surplus is down to January's income tax deadline payments, although discounting these still puts UK borrowing in line to come in under the government's target of £185.5bn for the financial year.

Unfortunately for those of you looking to send funds abroad, particularly in Euros, the strong UK data was followed by rising German consumer confidence, higher Eurozone factory output, and speculation about European interest rate rises. As a result, the Euro has strengthened, making buying Euros more expensive despite the upbeat UK data.

Tomorrow's Bank of England minutes will now be crucial in determining the next direction of sterling's movement.

This week's currency calendar

This week's main news releases are likely to be the Bank of England minutes (Wednesday) and the second reading of UK GDP on Friday. For the latest news and exchange rates, call Currency Index on 0800 043 2623 (+44 1923 725725 from abroad).

Monday 21st
USA Bank Holiday
Overnight - UK Rightmove house price index
0900 - Eurozone services & manufacturing PMI

Tuesday 22nd
0200 - New Zealand inflation expectations
0700 - German GfK consumer confidence
0930 - UK public sector net borrowing (January)
1330 - Canadian retail sales (December)
1500 - US consumer confidence (February)

Wednesday 23rd
0930 - Bank of England minutes
1500 - US home sales (January)

Thursday 24th
0700 - German GDP
1330 - US jobless claims & durable good orders (January)

Friday 25th
Overnight - UK GfK consumer confidence
0930 - UK GDP (Q4 2010)
1330 - USA GDP (Q4 2010)

This week's currency calendar

We are due a lot of very important data this week, particularly on home soil where we have inflation, retail sales, unemployment, and a Bank of England speech on the inflation outlook. These are all potentially of great influence on the short term value of sterling.

For the latest news and rates, please call us on 0800 043 2623 (+44 1923 725725 from overseas).

Monday 14th
1000 - Eurozone industrial production (December)

Tuesday 15th
0030 - Australian interest rate minutes
0700 - German GDP (Q4 2010)
0930 - UK inflation (January)
1000 - Eurozone GDP (Q4 2010), trade balance (December) & ZEW condidence survey
1330 - US retail sales (January)

Wednesday 16th
Overnight - UK consumer confidence
0930 - UK unemployment rate (December)
1030 - Bank of England quarterly inflation report & speech
1330 - US PPI inflation (January)
1415 - US industrial production (January)
1900 - US interest rate minutes
2145 - New Zealand PPI inflation (December)

Thursday 17th
0900 - Eurozone current account (December)
1330 - US jobless claims & CPI inflation (January)
1500 - Eurozone consumer confidence
1530 - Bank of Canada monetary policy report

Friday 18th
0700 - German PPI inflation (January)
0930 - UK retail sales (January)
1200 - Canadian CPI inflation (January)

Double blow for UK plc

The UK economy - and therefore sterling - has suffered a double blow today, as the CBI lowered its growth forecasts for the year to just 1.8%, and the trade gap widened to a new record high of £9.2bn in December.

With the Bank of England unlikely to move interest rates tomorrow, based on the fragility of the recovery, there does not seem to be any good news for the Pound, which has dropped 0.6c against the Euro during the course of today.

This week's economic news

Although we do not expect any major news such as an interest rate change from the Bank of England this week, there is plenty of data out in the UK and Eurozone which is likely to have an effect on exchange rates. With rates for buying Euros and Dollars currently enjoying some improvement, make sure you don't miss out on any opportunities to buy this week.

Contact us at Currency Index for the latest news and live trading rates.

Monday 7th
0030 - Australian retail sales (December)
0930 - Eurozone investor confidence
1100 - German factory orders (December)
2000 - US consumer credit (December)

Tuesday 8th
Overnight - UK BRC retail sales & RICS house price balance
0500 - German retail sales (December)
0645 - Swiss unemployment rate
2330 - Australian consumer confidence

Wednesday 9th
0700 - German trade balance (December)
0930 - UK trade balance (December)
1500 - Speech - US Federal Reserve chariman Bernanke

Thursday 10th
0030 - Australian unemployment rate
0500 - UK GDP estimate (NIESR)
0900 - European Central Bank monthly report
0930 - UK industrial & manufacturing production (December)
1200 - UK interest rate decision
2230 - Speech - Australian RBA governor Stevens

Friday 11th
0700 - German CPI inflation
0930 - UK PPI inflation
1330 - US trade balance (December)
1730 - Speech - European Cental Bank president Trichet

Sterling given lift by services sector

The Pound has enjoyed a strong start to the week, with this morning's PMI Services figures showing a pleasing return to growth in January.

Added to yesterday's industrial figures, the gloom left by last week's disappointing GDP figures has been somewhat lifted.

The Pound is now at its best level against the US Dollar for 3 months, and is also up against the Euro, which has been hit by the yesterday's downgrading of Ireland's credit rating.

Manufacturing sector boosts Pound

This morning's manufacturing inflation data showed activity grew at its fastest pace since 1992 in January - and manufacturing employment also rose at its quickest pace since records began.

Higher manufacturing inflation will theoretically lead to consumer inflation increasing - and therefore increase pressure on the Bank of England to increase interest rates which would be likely to increase the value of sterling.

The Pound rose to its best level against the US Dollar for 11 weeks on the release of the news, and is also up against the Euro.

The moves come despite depressing mortgage approvals and house price data also announced today.

News releases this week

This week we have the following news releases scheduled, all of which are potential influences on exchange rates. Contact us at Currency Index for the latest opinions & live trading rates for your own transaction.

Monday 31st
0700 - German retail sales (December)
1330 - Canadian GDP (November); US personal income & expenditure (December)
2230 - Australian manufacturing index

Tuesday 1st
0330 - Australian interest rate decision
0700 - UK house prices (Nationwide)
0900 - German unemployment rate
0930 - UK mortgage approvals (December) & money supply
1000 - Eurozone unemployment rate

Wednesday 2nd
1000 - Eurozone PPI inflation (December)
2145 - New Zealand unemployment rate

Thursday 3rd
1000 - Eurozone retail sales (December)
1245 - Eurozone interest rate decision

Friday 4th
0500 - UK house prices (Halifax)
1200 - Canadian unemployment rate
1330 - US unemployment rate & non-farm payrolls

Biggest drop in confidence since 1992

This morning's UK consumer confidence survey has shown its biggest fall since 1992.

Consumers are increasingly expecting a painful 2011, both in their own financial circumstances and the economy overall. With VAT up to 20% and negative growth, talk of a double-dip recession is increasing.

This is all bad news for sterling, which is continuing to fall. Unless the Bank of England decides to raise interest rates soon (which seems very unlikely), the Pound could be in for a negative period ahead.

To avoid the risk of falling currency rates making your own overseas purchase more expensive, remember you can fix and guarantee your exchange rate up to 2 years ahead with Currency Index.

Bank of England did consider interest rate rise

This morning's Bank of England minutes showed that the MPC did consider an interest rate rise in January - and the Pound has recovered slightly this morning as a result.

For the first time since rates were slashed to 0.5%, 2 of the 9 members voted for a 0.25% hike in rates. Higher interest rates would be likely to increase the value of sterling, and therefore improve exchange rates for sending money abroad.

However, the decision was made before yesterday's disastrous GDP figures were announced, and Mervyn King's speech last night suggested that rate rises may be off the agenda until the economy returns to stable growth.

For further review of the Bank's minutes, click here.

Disastrous GDP sends sterling lower

The first estimate of GDP for Q4 2010 shows the UK economy shrank by 0.5% - much worse than analysts' expectations of a 0.5% growth figure.

The Pound has fallen a cent against both the Euro and US Dollar this morning.

Mervyn King's speech this evening is unlikely to help, with many observers thinking that the Bank of England will not raise interest rates for some time to come, so sterling does not look likely to have any support in the short term.

This week's currency news

This week's main UK data releases are GDP (Tuesday 0930), Mervyn King's speech (Tuesday 1940) and Wednesday's Bank of England minutes (Wednesday 0930).

The Pound is vulnerable to any negative news, so any indications from the Bank of England that interest rates are not likely to be increasing in the short term, could bring exchange rates lower this week.

Monday 24th
No major data

Tuesday 25th
0030 - Australian CPI inflation
0700 - German business confidence
0930 - UK GDP (Q4 2010) and public borrowing (Dec)
1200 - Canadian CPI inflation
1500 - US consumer confidence
1940 - Speech: Bank of England governer Mervyn King

Wednesday 26th
0930 - Bank of England minutes
1915 - US interest rate decision
2000 - New Zealand interest rate decision

Thursday 27th
1000 - Eurozone consumer confidence
1330 - US jobless claims

Friday 28th
1330 - US GDP

Retail sales & mortgage approvals down

Sterling has been held back today by poor retail sales and mortgage figures in the UK, which showed:

- Only 40,000 new mortgages were approved in November
- Retail sales fell 0.8% in December, and were flat for the year

Analysts were hoping for a slight rise in retail sales, given the Christmas period, and for around 20% more mortgage approvals - both of which would have been indicators of better recovery in the UK economy.

With the sterling-euro rate falling away, aiming for rates of 1.20 may now not be realistic for some time to come.

UK unemployment rises to 2.5m

This morning's UK unemployment data showed a 49,000 rise to 2.5m at the end of November - although the official unemployment rate remains at 7.9%

Some analysts are warning of a 'double dip' in unemployment, with the jobless total set to rise further in 2011 before improving.

As unemployment is a key measure of the UK's economic recovery, the Pound can be affected. This morning we have seen a slight fall in sterling's value on the back of the releases.

There is no more major UK data due out until Friday's retail sales figures at 9.30am.

UK inflation up to 3.7% in December

This morning's inflation figures showed an increase to 3.7% in December - the highest in 8 months.

Sterling surged higher this morning, as analysts factored in an increased likelihood of interest rate rises, which are the Bank of England's main weapon against rising inflation.

The Pound was up nearly a cent against both the US Dollar and Euro by 10am, although it has fallen back a little since.

Note that tomorrow's UK unemployment rate, released at 9.30am, could cause sterling to fall back further if the labour market is still struggling.

This week's currency news

This week's economic data likely to affect exchange rates is listed below. Call Currency Index on 0800 043 2623 for the latest trading rates and opinions for your own overseas currency transfer.

Monday 17th
Overnight - Rightmove house price index

Tuesday 18th
Overnight - RICS house price balance & Nationwide consumer confidence
0930 - UK CPI & RPI inflation
1000 - German & Eurozone ZEW economic sentiment survey
1400 - Canadian interest rate decision

Wednesday 19th
0930 - UK unemployment rate
1000 - Eurozone construction output
1330 - US housing starts
1530 - Bank of Canada monetary policy report
2145 - New Zealand CPI inflation

Thursday 20th
0900 - European Central Bank monthly report
1500 - US existing home sales
2145 - New Zealand retail sales

Friday 21st
0900 - German business climate survey
0930 - UK retail sales & public borrowing
1330 - Canadian retail sales

Factory inflation gives Pound a boost

After yesterday's losses, sterling has recovered this morning after higher than expected producer inflation rasied the likelihood of interest rate rises in the UK sooner rather than later.

Inflation is running well above target, and an interest rate rise would help to control it - as well as giving the Pound a boost.

The Bank of England yesterday voted for interest rates to remain at 0.5%, but we will not know how the committee vote was split until the minutes are released in a couple of weeks.

To take advantage of improved rates for your own transfers, call Currency Index on 0800 043 2623.

Euro stronger on bond sale, as interest rates held

The Euro strengthened (became more expensive) today as Spain and Italy held successful bond sales, easing fears of further financial difficulties in the Eurozone (see Reuters' article for more).

As interest rates were held in the UK and Eurozone, USA inflation figures were weaker than expected - resulting in cheaper US Dollars and more expensive Euros this afternoon.

Trade gap widens

The Pound's recent run came to a halt this morning, as the UK's trade balance worsended slightly for November, compared to expectations of a slight improvement.

Stronger than expected industrial production in the Eurozone and import figures in the USA have not helped exchange rates either.

The Pound has recovered a little this afternoon however, and we now await tomorrow's round of interest rate decisions along with UK manufacturing figures at 9.30.

Euro rate improves 3% in 10 days

So far in 2011 the Euro exchange rate has improved by over 3% - great news for those of you needing to send payments to Europe.

A weaker Euro against the USD has also helped sterling, and with no fresh bad economic news out recently in the UK, we have seen a sharp spike in rates.

Contact Currency Index for the latest rates available for your own transaction, whether for immediate transfer or fixed for a date in the future.

This week's currency news

This week we have the following data due out, which may affect exchange rates:

Monday 10th
0030 - Australian retail sales trends
1530 - Bank of Canada business outlook survey

Tuesday 11th
Overnight - British Retail Consortium retail sales monitor
0030 - Australian trade balance
1315 - Canadian housing starts

Wednesday 12th
Overnight - UK consumer confidence
0930 - UK trade balance (November)
1330 - US import price index

Thursaday 13th
Overnight - UK GDP estimate (December)
0030 - Australian unemployment rate
0930 - UK industrial & manufacturing production (November)
1200 - UK interest rate & QE decision
1245 - Eurozone interest rate decision
1330 - Speech: ECB President Trichet
1330 - US trade balance (November)

Friday 14th
0700 - German CPI inflation (December)
0930 - UK PPI inflation (December)
1000 - Eurozone CPI inflation (December) & trade balance (November)
1330 - US CPI inflation & retail sales (December)