Currency Market Update 26/01/10
Posted: Tuesday, January 26, 2010
by Phil Bennetts
Foreign Exchange Explained
The Pound According to a report by Bloomberg yesterday no matter who wins the general election, Gordon Brown or the opposition leader David Cameron, the loser will be the pound, because the next government may not have enough support in parliament to rein in the Group of 20's biggest budget deficit. Strategists have cut forecasts on sterling versus the dollar by as much as 2% this month to the lowest since June. The currency will be weighed down by polls that point to the first parliamentary stalemate in a generation, growth that lags behind the four biggest industrialized economies and a fiscal shortfall that has ballooned to almost 13% of gross domestic product, double what it was a year ago. However the pound opens this morning surging forward against the Euro.
The Euro advanced against the US Dollar and Sterling for the second day, and the single-currency could continue to make gains as investors are looking at the busy week in the U.S., where the Federal Reserve will consider its interest rate policy and the Senate will vote on a second term for Fed Chairman Ben Bernanke. The ECB board member Ewald Nowotny said economic activity in Eastern Europe is recovering faster than anticipated according to an article on the Financial Times, and assured that the central bank will implement a "steady-hand approach" to normalize policy as the euro-zone creeps out of the worst recession since the post-war period.
Data released 26th Jan
EU Current account (nsa)
DE IFO Business Climate
DE IFO Current Conditions
DE IFO Expectations
UK GDP (1st est)
UK BBA Mortgage Approvals
US Consumer confidence
Live IB Rates 8.38 am
GBP-EURO 1.153
GBP-USD 1.624
GBP-AUD 1.81
EURO-USD 1.408
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