UKForex: Eurozone PMI index data comes in highest since July [25/01/2011]

UKForex: Eurozone PMI index data comes in highest since July [25/01/2011]

United States Dollar: The start of the week saw fairly subdued price action for the GBP/USD pair, consolidating around the 1.6000 figure for most of the day. Early on, the pound wasn’t helped by an article in The Telegraph which discussed the re-emergence of the threat of the double-dip recession in the U.K. off the back of worries ahead of this morning’s release of preliminary Q4 U.K. GDP figures, which are expected to show a modest slow down to 0.5% from Q3’s figure of 0.7%. With little in the way of meaningful economic data sterling was given a boost via hawkish comments from Bank of England member Sentance, though this shouldn’t have come as too much of a surprise given that he was the only MPC member to have voted in favour of tighter monetary policy last year. Investors eagerly await the U.K. GDP figure to see if cable is able to break out of its recent consolidation ranges and later today attention will turn to the Bank of England Governor, Mervyn King, as he speaks in Newcastle. GBP/USD opens this morning at 1.5965. 

– We expect a range today in the GBP/USD rate of 1.5830 to 1.6010 

Euro: The 17-nation currency continued to make decent gains yesterday, initially off the back of strong Euro zone composite PMI index data, which came in at its highest levels since July; the release was tempered however, as it revealed a slight moderation in Euro zone manufacturing despite showing that Euro zone service sector activity accelerated. The euro was also boosted by reports that speculative euro positioning turned positive for the first time in 8 weeks, according to the CFTC, a consequence of the renewed investor sentiment in the single currency as worries regarding the debt issues of the region have eased somewhat of late. Sterling continued to suffer against the euro yesterday as investors pared bets that the Bank of England will look to raise rates this year, and sentiment in the 17-nation currency continued to improve. GBP/EUR continues to be well offered in the interbank market on that basis. Today the spotlight will fall on Spain, as they auction off up to 3 billion euro in three and six month debt. GBP/EUR opens this morning at 1.1675. 

– We expect a range today in the GBP/EUR rate of 1.1620 to 1.1780 

Aussie and Kiwi Dollars: The AUD and NZD strengthened against sterling yesterday, stemming the recent rallies in the GBP/AUD and GBP/NZD pairs as risk appetite took hold, and investors began to take some profit ahead of the U.K. Q4 GDP figure this morning. Early on, the cooler than expected Australian PPI figure was shrugged off by the AUD as the GBP/AUD pair fell steadily throughout the day. GBP/NZD also suffered heavy losses, falling easily back towards the 2.0900 level and lower as the day wore on. GBP/AUD and GBP/NZD open this morning at 1.5990 and 2.0842 respectively. 

– We expect a range today in the GBP/AUD rate of 1.5820 to 1.6050 

– We expect a range today in the GBP/NZD rate of 2.0670 to 2.0890


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