Good Morning. If you thought UK’s economy is looking nice and rosy think twice. As Greece sneezes, the UK seemingly catches a cold (or maybe even flu). As Greece went to the verge of default for the n-th time, Sterling fell to an 8 month low against the USD. The trigger could have been the worryingly high unemployment rate data released yesterday. Overall unemployment rose by 80,000 for the three months to July, much higher than analysts’/economists’ expectation of 35,000 claims. Mr Camerson called the figures ‘disappointing.’ However, the unemployment rate was reported at 7.9%, along the economists’ expectations. The noise for Quantitative Easing 3 may get stronger now as austerity measures are stunting growth.
CURRENCY RATE OVERVIEW
EURO/GBP – 1.1481
US$/GBP – 1.5761
CHF/GBP – 1.3824
CAN$/GBP – 1.5653
AUS$/GBP – 1.5428
ZAR/GBP – 11.712
JPY/GBP – 120.89
HKD/GBP – 12.294
NZD/GBP – 1.9332
SEK/GBP – 10.592
US$/EURO – 1.3735
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Jose Manuel Barroso’s announcement yesterday that the European Commission is toying with the idea of issuing Euro bonds cheered the market as Euro strengthened and equity markets surged. Germany, however, is resisting the idea of euro bonds, though it is expected to give the peripheral PIIGS economies access to cheaper funds.
The market also got a boost yesterday after it was learnt that the BRICS (Brazil, Russia, India, China and South Africa) economies may support Europe when the leaders meet next week at the annual World Bank and IMF summit. The euro zone consumer figure is expected today and may well decide market sentiments for the week. A conference call between the leaders of France, Germany and Greece soothed some ruffled feathers after Angela Markel and Nicholas Serkozy reiterated their support for Greece.
Retail sales in US showed no signs of growth over last month.
Euro: The Euro lost against the USD yesterday as market players continue to prefer the Greenback as a safer bet. However, it had gained over the Sterling.
USD: The Sterling had a bad day yesterday against the USD and weak UK retail sales data for August, expected today, may push it down further.
Elsewhere, the Australian dollar along with Norwegian Krone and Canadian dollar weakened against the US dollar.
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