The Pound declined against the Euro and the Dollar on Friday as investors expect that the BoE will maintain their lax monetary policy to counter slowing growth. Minutes from the Bank’s last meeting showed that members voted 7-2 to maintain current policies, and it looks as if a growing faction may actually be leaning towards easing. The Pound has posted an overnight gain against the EUR, trimming the first weekly decline in the past three, but it too remains vulnerable to gaining risk aversion.
The Dollar made gains against the Pound and the Euro on Friday as US economic data registered slightly better than expected. Q2 GDP was upwardly revised to 1.9% and personal consumption registered in line with expectations at 2.2%. Durable goods orders gained overall by 1.9%, better than last month’s 2.7% contraction, but with the volatile transportation component stripped out, orders expanded by a less impressive 0.6%. US markets are also under pressure after budget talks fell apart on Capitol Hill yesterday afternoon. With the deadline to raise the debt ceiling just weeks away, Republicans and Democrats still seem far from consensus. With risk aversion again driving markets this morning, the dollar will likely retest its recent highs against many of its major
The Euro made small gains against the Euro while declining against the Dollar on lingering concerns that Greece will not meet the conditions to receive further funding from the IMF and EU. However, the common currency’s precipitous drop has been slowed by stronger than expected data out of the region’s core economies. Most had expected a decline in the IFO, signalling that German business confidence was beginning to erode. Nevertheless, the measure managed to post a gain over last month, registering 114.5, just shy of the record high of 115.4 posted back in February. However, while the region’s large economies appear to be weathering the worsening sovereign debt crisis, the euro remains vulnerable to risk aversion. Ahead of next week’s key austerity votes in Greece, the EUR will struggle to post any lasting gains.
Data released 23.06.2011
US 13.30 Personal Income / Consumption (May)