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Please note no more posts will be made on this blog from 7/7/11.

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Service sector grows as Euro retail sales fall

We have seen a slight improvement in exchange rates this morning, as UK services growth showed a slight increase beyond analysts' expectations.

Along with weaker Euro retail sales data, this has given sterling a small boost against the Euro and most other currencies this morning.

However, alongside other data in the last week showing poor performances in manufacturing and construction, it looks as though Britain's recovery failed to gain momentum in the second quarter.

This week's currency news

The first full week of the month is always busy with data releases, and July is no exception.

The main news due out for those of you buying or selling Euros is likely to be Thursday's Eurozone interest rate decision. The ECB are widely tipped to increase the base rate to 1.5%, which markets have been pricing in over recent weeks giving a stronger (more expensive) Euro. The UK interest rate decision on the same day is very likely to be 'no change'.

In the USA, we have a holiday today for Independence Day, and will wait until Friday for the main data of the week, non-farm payrolls which is the main monthly indicator of the health of the US jobs market and can cause volatility in the dollar.

In general sterling remains vulnerable and until we see some improvements in confidence and the outlook in the UK, we don't expect any major upward movement for the Pound.

Monday 4th
US Bank Holiday
0815 - Swiss retail sales
0930 - UK manufacturing

Tuesday 5th
0530 - Australian interest rate decision
0930 - UK services
1000 - Eurozone retail sales
1500 - US factory orders

Wednesday 6th
1000 - Eurozone GDP
1100 - German factory orders
2345 - New Zealand GDP

Thursday 7th
0230 - Australian unemployment
0930 - UK industrial & manufacturing production
1200 - UK interest rate decision
1245 - Eurozone interest rate decision

Friday 8th
0645 - Swiss unemployment rate
0930 - UK PPI inflation
1200 - Canadian unemployment rate
1330 - US non-farm payrolls

GDP as expected

This morning's final revision to UK Q1 GDP showed 'no change' to the previous reading of 0.5% growth in the 3 months to March.

Those of you following exchange rates for sending money abroad will have been hoping for better news to turn around the Pound's recent decline.

With house price and mortgage data still to come this week, further losses could be on the cards unless there is some (unlikely) positive news.

Currency news this week

As we near the end of June, a quiet week ahead for economic data, with the notable exception of UK GDP released tomorrow morning at 9.30am. This is the final revision of economic growth in the first quarter of 2011, and one of the main measures which influences markets' views on the UK economy - therefore any revision to the previous figures is likely to have an immediate impact on sterling.

Don't forget that next week the European Central Bank are likely to raise their interest rates too, which could well give the Euro strength, reducing rates for buying Euros. We also have the ongoing Greek crisis with votes due on austerity measures, and the prospect of UK strikes later in the week unlikely to help the Pound's cause either.

Monday 27th
1330 - US personal income & expenditure

Tuesday 28th
0930 - UK GDP & business investment
1500 - US consumer confidence

Wednesday 29th
0930 - UK mortgage approvals
1000 - Eurozone consumer confidence
1200 - Canadian CPI inflation
Overnight - UK consumer confidence

Thursday 30th
0700 - German retail sales
0855 - German unemployment
1000 - Eurozone CPI inflation
1330 - Canadian GDP

Friday 1st
1500 - US construction spending

Bank of England votes 7-2 as Greece survives vote

The Bank of England has revealed its interest-rate setting committee voted 7-2 to keep interest rates on hold in June.

New member Ben Broadbent voted for no change, replacing ex-member Andrew Sentance who was a supporter of higher interest rates.

In a blow for the Pound, interest rate rises this year are now seen as even less likely, causing the value of sterling to fall this morning.

In Greece, the government has also passed a vote of confidence ahead of proposed austerity measures and another ECB/IMF bailout, adding strength to the Euro and decreasing exchange rates further for those of you sending money to Europe.

This week's currency news

This week's main news for the Pound is likely to be Wednesday's Bank of England Minutes, which will show the split in the vote to keep interest rates on hold earlier this month. With a new committee member, Ben Broadbent, voting for the first time, there may be some change from the 6-3 split seen in the last few months.

With ongoing severe debt problems in Greece, planned public sector strikes in the UK next week, and lots of other economic news due out around the world, there could be volatility in the currency markets.

Monday 20th
0700 - German PPI inflation

Tuesday 21st
0230 - Australian interest rate minutes
0930 - UK public sector net borrowing
1000 - Eurozone & German ZEW sentiment survey
1330 - Canadian retail sales
1500 - US home sales
2345 - New Zealand current account

Wednesday 22nd
0930 - Bank of England minutes
1000 - Eurozone industrial orders
1500 - Eurozone consumer confidence
1730 - US interest rate decision

Thursday 23rd
0715 - Swiss trade balance
0900 - Eurozone manufacturing & services inflation
0930 - UK mortgage approvals

Friday 24th
1330 - US GDP

Retail sales fall 1.4%

May's disappointing retail sales figures, showing a 1.4% drop in May, have held sterling back this morning.

High street activity was expected to fall after April's spike due to the royal wedding and run of bank holidays, but the decline was much more than expected.

We have now had all major UK data for the week, although for those of you tracking Euro rates we have the ECB monthly report and Eurozone trade balance due out tomorrow morning.

Mixed bag for unemployment

Unemployment figures this morning showed a drop of 88,000 in the 3 months to April, the biggest fall since 2000, with the jobless total now 2.43m.

However, the number of jobseekers' allowance claimants rose by 19,600 to 1.4m, the biggest rise since July 2009.

Earnings growth also fell.

Given the mixed data, the Pound intially fell but has since recovered against the Euro, although is losing ground against the US Dollar. Call us at Currency Index for the latest live rates.

UK inflation stays at 4.5%

Sterling has fallen back this morning after inflation figures showed 'no change' in May at 4.5%.

High inflation has been one of the main arguments for raising UK interest rates, and the Bank of England expects inflation to go up further throughout the summer. This morning's figures were lower than expected, and coupled with Halifax's announcement this morning that May house prices were 4.2% lower than a year ago, the Pound has started to lose value again.

Currency news this week

This week's economic calendar is below, and in the UK we have 3 main releases: inflation, unemployment and retail sales, at 9.30 each morning from Tuesday to Thursday.

Each of these has the potential to impact the value of sterling.

Retail sales & inflation are also due out in the USA, and inflation in Europe, so we could see some volatility this week in GBP-EUR and GBP-USD. Call Currency Index on 0800 043 2623 for the latest rates and news.

Monday 13th
No major data

Tuesday 14th
Overnight - UK consumer confidence & RICS house price balance
0930 - UK inflation (RPI & CPI)
1330 - US retail sales
2345 - New Zealand retail sales

Wednesday 15th
0930 - UK unemployment rate
1000 - Eurozone industrial production
1330 - US inflation (CPI)

Thursday 16th
0830 - Swiss interest rate decision
0930 - UK retail sales
1000 - Eurozone inflation (CPI)

Friday 17th
0900 - ECB monthly report
1000 - Eurozone trade balance

Europe and UK keep interest rates on hold

Both today's interest rate decisions, in the UK and Eurozone, were 'no change' as expected. The Bank of England is widely tipped to keep interest rates on hold until late 2011, while the European Central Bank may raise rates further in the summer.

European Central Bank Trichet, in the accompanying press conference, again states "strong vigilance" was warranted, which is taken to mean that European interest rates could well be increased to stave off inflation over the summer.

Higher interest rates tend to make a currency more expensive, so the cost of exchanging sterling to Euros might be likely to increase if analysts start to 'price in' Eurozone interest rate rises before we see any in the UK.

For further analysis please see Reuters or call us at Currency Index (0800 043 2623) for the latest views and live rates.

This week's currency news

This week sees the monthly round of interest rate decisions in the UK, Europe, New Zealand and Australia. Rates are expected to remain on hold in the UK for several more months, so any other currencies where interest rates start to rise further will probably gain momentum, leaving their currencies more expensive.

We also have the UK trade balance out on Thursday, but little else to potentially give the Pound a boost. Releases due out around the world are listed below.

Monday 6th
1000 - Eurozone PPI inflation

Tuesday 7th
0530 - Australian interest rate decision
1000 - Eurozone retail sales

Wednesday 8th
1000 - Eurozone GDP
2200 - New Zealand interest rate decision

Thursday 9th
0230 - Australian unemployment rate
0930 - UK trade balance
1200 - UK interest rate decision
1245 - Eurozone interest rate decision
1330 - US trade balance

Friday 10th
0930 - UK industrial & production manufacturing
1200 - Canadian unemployment rate
1530 - UK GDP estimate

Manufacturing, mortgages and money supply all fall

Sterling fell this morning on 3 worse-than-expected data releases in the UK. Mortgage approvals fell to 45,000 in April, signalling more problems in the housing market, while manufacturing growth fell and the measure of money supply in the economy was also below expectations.

There is not much else due out this week in terms of UK data, so the Pound may struggle to recover much ground. Exchange rates fell nearly a cent against the Euro and US Dollar this morning.

Currency news this week

After the long weekend we have a mixed bag of news releases scheduled this week, with the only main UK figures being mortgage approvals and services & manufacturing growth.

There are various other pieces of news due around the world, with the details below of anything likely to affect exchange rates in each country. Contact us at Currency Index for the latest news and live rates.

Monday 30th
1330 - Canadian GDP

Tuesday 31st
0200 - New Zealand business confidence
0230 - Australian current account
0645 - Swiss GDP
0700 - German retail sales
0855 - German unemployment rate
1000 - Eurozone CPI inflation & unemployment rate
1400 - Canadian interest rate decision

Wednesday 1st
0230 - Australian GDP
0930 - UK mortgage approvals & PMI manufacturing

Thursday 2nd
0230 - Australian trade balance
1500 - US factory orders

Friday 3rd
0930 - UK PMI services
1330 - US unemployment rate & non-farm payrolls

GDP unchanged

This morning's revision to the first quarter UK GDP showed no change from the 0.5% first estimate, meaning the UK economy had not grown at all in the 6 months to the end of March.

While a downward revision would have caused trouble for the Pound, there has been little impact from the figures this morning, although we have seen rates for buying USD spike up by nearly 0.5c

UK public borrowing hits record high

This morning's public borrowing figures showed the worst April on record with a net public borrowing figure of £7.71bn. Analysts had expected a figure nearer £4bn, so fears have grown that the UK economy is still far from a sustainable road to recovery.

The Pound fell sharply on the news, and now tomorrow's GDP revision is even more critical, as any further disappointing data will be likely to weigh strongly on sterling. The GDP revision is published at 9.30am tomorrow.

Currency news this week

This week's main news will be Wednesday's adjustment to UK GDP. Any improvement on the previous estimate of 0.5% growth in Q1 will likely be positive for the Pound, while any revision downwards would have a negative effect on sterling.

Monday 23rd
0900 - Eurozone manufacturing & services PMI

Tuesday 24th
0400 - New Zealand inflation report
0700 - German GDP
0930 - UK public borrowing
1500 - US home sales

Wednesday 25th
0930 - UK GDP
1330 - US durable goods orders

Thursday 26th
0715 - Swiss trade balance
1020 - Speech: European Central Bank President Trichet

Friday 27th
Overnight - UK consumer confidence
1330 - US personal income & expenditure

Retail sales better than expected

This morning's UK retail sales figures were better than expected, showing a 2.8% increase in the 12 months to April.

Sterling found some strength this morning, and combined with weak US manufacturing numbers this afternoon, has recovered nearly a cent against the US Dollar.

Unfortunately the Euro had a rally of its own during the afternoon, leaving rates for buying Euros back where they started at the beginning of the day.

With little important data out tomorrow (except in Canada), we are not expecting any improvements in the outloook for sterling this week.

Unemployment falls, but so does Pound

Sterling has fallen across the board this morning, despite figures showing a slight fall in unemployment to 2.46m at the end of March. The official rate is now 7.7%.

Meanwhile the Bank of England minutes showed that the MPC voted 6-3 in favour of keeping interest rates on hold in May. This was as expected, although the minutes revealed that 2 of the members who did vote for an interest rate rise are not entirely convinced that the policy would be on the right path.

Interest rate rises would be a major factor in increasing the value of the Pound and therefore would be good news if you need to make international payments. The fact that the committee is even less committed to a rate rise than was previously thought, is the reason behind the fall in the Pound this morning.