The Pound made gains against the Euro while declining against the US Dollar yesterday as the Pound retraced some of its earlier gains as hawkish comments from BoE policy board member Andrew Sentence about the UK’s AAA credit rating. GBP was also buoyed against an underperforming euro, which remained under pressure due to concerns over the fiscal health of Greece and, increasingly, Portugal.
The Dollar made gains against the Euro and the Pound yesterday due to persistent concerns over the fiscal health in some smaller euro zone countries such as Greece and Portugal. The Dollars gains were limited against other currencies after U.S. data showed initial jobless claims fell less than expected last week, while durable goods orders increased less than expected in December. Both reports dented optimism about a U.S. economic recovery and spurred investors to shy away from riskier investments.
Also to note the dollar gained support after Kansas City Fed President Thomas Hoenig dissented from a U.S. Federal Reserve pledge, in a statement after a policy meeting, to keep interest rates low “for an extended period”. This bolstered the view that rates may start to rise later this year.
The Euro declined against Dollar and the Euro yesterday hurt by concerns about the fiscal health of Greece and other peripheral euro zone countries. The financial markets are concerned that Athens will not be able to service its heavy debt, putting pressure on the euro currency and even raising speculation as to whether Greece could be forced out of the euro zone. Also to note German unemployment came in much better than forecast while European Central Bank Executive Board member Gertrude Tumpel-Gugerell said it was time fiscal and monetary policy returned to “normal”.
Data released 29th January
EU 10.00 Flash HICP (January)
EU 10.00 Unemployment (December)
US 13.30 Employment Cost Index (Q4)
US 13.30 Advance GDP (Q4)
Deflator
US 14.45 Chicago PMI (January)
US 14.55 Michigan Sentiment (January Final)