The currency blog

Yesterday the Pound affirmed its status of being the current whipping-boy currency following the disappointing manufacturing and industrial production numbers yesterday morning. Given the much worse than expected trade figures from Tuesday, economic pundits had marked down their assumptions for yesterday’s data but the outcome proved even less palatable. Given the lack of anything more relevant, Sterling was sharply sold off, touching a low of 1.4870 against the Dollar and dipping down to 1.0950 versus the Euro. Today the pound has managed to forge a move back over 1.10 (just) and 1.50…news that a Bank of England survey expects inflation to rise for the year ahead has helped. The market again needs to target 1.52 on the USD and sustain over 1.10 against the euro before we can look at sterling pushing higher. Still a lot of negatives in sterling so I am not that bullish on todays move.

Yesterday we had the result of the RBNZ monetary policy meeting at which, as had been expected, they left the Kiwi interest rates unchanged at 2.5%. The Governor, in his statement that followed, reiterated previous guidance that it would not be until about the middle of the year that the Bank expected to start removing its policy stimulus measures ie tightening rates and withdrawing liquidity. This leaves the Dollar exposed to further losses against its Australian neighbour, who appear to be well on the way to additional tightening measures.

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