United States Dollar: The pound fell against the US dollar on Friday. The greenback has continued to push higher in line with US treasury yields. Growing tensions between North and South Korea are also leading investors to seek the haven of the dollar whilst European debt concerns drag cable lower too. Ireland’s sovereign credit rating was downgraded again on Friday, by five notches to Baa1. GBP/USD eventually bottomed out around 1.5460 on the same day. It has slipped below the 1.5500 figure before in the last month where it was met with solid buying interest and although perhaps not solid this time, there have been more buyers lined up. GBP/USD opens this morning at 1.5550. A report by the CBI calling for higher interest rates is being read this morning but is not having a dramatic impact. In fact things might start quietening down now in the run up to the xmas holidays. Only UK consumer confidence data is due today.
– We expect a range today in the GBP/USD rate of 1.5460 to 1.5590
Euro: EUR/USD slumped on Friday. Moodys downgrade of Irish debt early on Friday/Thursday evening started the sell off in the single currency. The debt concerns are not simply confined to Ireland however. A report on Reuters this morning questions Frances AAA grade and states that this is at risk as the ratings cuts spread throughout much of peripheral Europe. Amidst these concerns German business confidence data released on Friday actually rose unexpectedly. It was largely ignored as markets fretted over European debt woes and EUR/USD fell to a low of 1.3140. It is a little higher this morning and opens up at 1.3175. The Euro has fallen against most currencies as a result including against the pound. GBP/EUR is back through 1.1800 and it opens up this morning at 1.1815.
– We expect a range today in the GBP/EUR rate of 1.1770 to 1.1840
Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD are still both steady this morning, this despite markets appearing to be fairly risk averse currently. They trade at .9905 and .7400 respectively. The relative strength of both commodity currencies has been brought in to question recently. According to the Organisation for Economic and Cooperation and Development these currencies are at least 9.5% overvalued as their central banks continue to raise interest rates to combat rising prices of raw material exports. Of course such comment is not likely to have a negative impact on either currency, so long as they continue to pay a higher yield in comparison to most other major currencies. GBP/AUD is slightly lower this morning and opens at 1.5700 whilst GBP/NZD trades at 2.1000. Australian monetary policy meeting minutes are due tonight.
– We expect a range today in the GBP/AUD rate of 1.5620 to 1.5780
– We expect a range today in the GBP/NZD rate of 2.0940 to 2.1080