Good morning and welcome to today’s foreign exchange market commentary on Tuesday, the 13th of March.
Not much economic data came out from either side of the Atlantic yesterday and investors chose to play it safe ahead of the FOMC meeting today in the US. Leading bank stocks in the US lost about one percent yesterday as the Federal Reserve is expected to release the results of second-round of stress-tests this week. Nonetheless US stock markets remain at multi-month highs as the economy starts to gain momentum and the Greek deal is behind us.
Meanwhile, Eurozone finance ministers have turned their attention to Spain after signing off the second bailout package for Greece yesterday. Eurozone’s fourth biggest economy Spain fell short of its budget deficit target of 6 percent of GDP in 2011. At 8.5 percent deficit, Spain overshot target by €90 billion for the year.
Spain has revised its deficit target for 2012 to 5.8 percent from the earlier 4.4 percent, while target for 2013 remains at 3 percent. The Spanish economy is expected to shrink 1 percent this year after expanding 0.7 percent in 2011. Despite failing to meet targets, Spain is unlikely to witness any further action from Brussels as unemployment hit a staggering 23 percent in 2011.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1878
GBP/US$ – 1.5637
GBP/CHF – 1.4324
GBP/CAN$ – 1.5491
GBP/AUS$ – 1.4842
GBP/ZAR – 11.782
GBP/JPY – 128.78
GBP/HKD – 12.1350
GBP/NZD – 1.9034
GBP/SEK – 10.602
EUR: The single currency gained overnight as EU finance ministers approved the second bailout package for Greece. The euro rose to 1.3185 versus the greenback and touched 1.1875 against the Pound. Markets remained near flat due to lack of economic news yesterday. The common currency however, pared some of yesterday’s gains since as markets wait the US Fed decision today. The EUR/USD pair currently sits at 1.3140 while the GBP/EUR pair opened at 1.1930 this morning.
USD: Sterling continues to be weak versus the dollar as the greenback continues its forward march. The GBP/USD pair touched 1.5610 yesterday, a level last seen in late January. However, Sterling edged up in late trade as UK house sales came in slightly better in Feb. The GBP/USD pair opens at 1.5660 this morning.
Have a great day!