United States Dollar: The pound fell on Friday following a run of poor economic data. UK fourth quarter GDP data was revised lower by -0.1% to -0.6%. At the same time other figures showed that Prelim Business Investment fell by 2.5% during the quarter vs. expectations for -0.5% and that Index of Services fell by 0.7% vs. expectations for a fall of 0.4%. GBP/USD fell to a low of 1.6030 as a result. Meanwhile trouble in the Middle East and Africa goes on. Equities have felt the brunt of this in terms of risk aversion whilst the US dollar is actually a touch weaker this morning. This comes following a round of short covering during a relatively quiet Asian session and a downward revision to US GDP on Friday. It was revised to an annual rate of 2.8% from 3.2% due mainly to a contraction in government spending. GBP/USD opens the week back above the 1.6100 figure at 1.6110. There is no UK data due for release this morning. US Pending Home Sales will be eyed this afternoon.
– Expected range today in the GBP/AUD: rate of 1.5820 to 1.5980
– Expected range today in the GBP/NZD: rate of 2.1360 to 2.1500
– Expected range today in the GBP/EUR: rate of 1.1680 to 1.1740
– Expected range today in the GBP/USD: rate of 1.6060 to 1.6190
Euro: EUR/USD was sold off aggressively on Friday morning following a mixed set of German Prelim CPI data. French Consumer Spending, although not an overly important data release, also came in weak. EUR/USD fell to a low of 1.3710 by the afternoon before rebounding on supportive comments from French Finance Minister Christine Lagarde who said that Spain will not need to be bailed out. The IMF”s Director of Europe, Antonio Borges, also confirmed over the weekend that the bailout fund supports the current ECB policy stance which has also been mildly supportive of the single currency. EUR/USD trades at 1.3780 this morning. GBP/EUR has traded a fairly choppy range recently and opens towards the bottom of this range this morning. The weak UK data, released on Friday morning has forced the pair on the back foot and it opens up just below the 1.1700 figure this morning at 1.1695. All eyes this week in Europe will be on the ECB Monetary Policy Statement due this Thursday.
Aussie and Kiwi Dollars: The Aussie Dollar has performed relatively well over the last week despite current turmoil in the Middle East and Africa and the risk aversion that has ensued. It opens this morning at 1.0150, buoyed by a weaker US dollar and good real money demand for the currency. It was also supported by an uptick in Q4 business inventories which bodes well for Australian GDP data due on Wednesday. NZD/USD has made a small recovery overnight, after the steep fall following the earthquake disaster in Christchurch last week. The Kiwi was buoyed slightly by a strong NZ Business Confidence release, although markets are mindful that the survey was taken prior to the earthquake. Any gains will be limited as a result of the recent disaster. NZD/USD has made a push through the .7500 figure in the last 12 hours or so and opens this morning at .7520. On the cross rates GBP/AUD is lower today and trades at 1.5870 currently whilst GBP/NZD sits at 2.1420.