The currency blog

The consolidation period for Sterling did not last too long and overnight in Asian trading and so far this morning it has been under selling pressure again. The reason for the fall today has again been attributed to narrowing polls showing that Labour and conservatives are “neck and neck”. In addition credit rating agency Fitch has stated that the UK sovereign credit profile has deteriorated and Moody’s has warned that some UK banks could face downgrades. To top it off we have received poor economic data with UK RICS house price balance coming in weaker than expected and the UK January trade balance was also weaker than anticipated. The pound has crashed back through the 1.50 level against the USD and is testing the 1.10 level on the euro.

Elsewhere the euro has come under some pressure too against the USD and the JPY. Although the Greece situation is becoming yesterdays news, there are a number of other economies to replace Greece such as Portugal and Italy for starters. Expect the euro to remain under pressure for the foreseeable future.

The NZD has been choppy ahead of their interest rate announcement on Thursday morning. The expectation is that the RBNZ will keep rates on hold, however it seems some doubt has crept in and is causing volatility in the NZD crosses.

Not too much on the economic calendar for the rest of today- same story with sterling as last week in that it needs to get back above 1.50 and preferably 1.52 against the USD to forge a move higher.

Discuss on this on the Currency Exchange Forum