Daily Market Report 14/11/12

King in Search of a Weaker Pound

An improved UK outlook saw sterling make gains across the board yesterday, before returning to similar levels against both the euro and dollar at the close of play.

At 2.7%, the UK’s higher than expected inflation result prompted a sudden burst of strength causing the pound to hit its highest level since Oct 1st. UK housing data was also a contributor, returning more positive than expected, albeit still showing negative sentiment.

The gains made on the euro and dollar were reeled in as suggestions that a €44bn fund could be organised on Greece’s behalf by Germany. Investors will remain sceptical; however the combination of these rumours and a successful Greek bond auction caused the euro to fight back against earlier losses following poor German economic sentiment.

Today a plethora of data is released, US retail sales being the pick of the bunch; however the fiscal cliff worries continue to generate a stubborn dollar that represents the cover of safety. Conversely, with aspirations of a weaker pound, Governor of the Bank of England, Mervyn King, could allude to further stimulus in his speech later this morning which could cause sterling to drop off.

As a concluding thought, if Mr King does indicate further easing, foreign currency buyers could be rewarded for remaining responsive. By securing their future needs now, with sterling in its current position, investors and businesses alike could protect their downside risk exposure.

 

Today’s Key Announcements:
  • 09.30am – GBP – Claimant Count Change: expected to decrease by 0.5k
  • 09.30am – GBP – Unemployment Rate: expected to stay level at 7.9%
  • 10.00am – EUR – Industrial Production: expected to contract by 1.6%
  • 10.30am – GBP – BOE Gov King Speaks
  • 10.30am – GBP – Inflation Report
  • 13.30pm – USD – Core Retail Sales: expected to reduce to 0.3%
  • 13.30pm – USD – PPI: expected to reduce to 0.2%
  • 19.00pm – USD – FOMC Meeting Minutes

 

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