The currency blog

Not a great deal of movement in the FX markets- the pound is currently just under the 1.50 level and a touch over 1.11 against the euro. The pound has lost about a cent against the USD in early trading as the markets remain nervous on the budget outcome. In addition the pound is a little softer in relation to UK inflation falling (although very slightly) for the first time since September- the fall will be welcomed by the BoE who predicted lower inflation for the second half of 2010. However the rate which now sits at +3.0% year on year is still a full 1 per cent above the target level of 2%, the pound is lower as falling inflation could lead to further Quantitative Easing in the future.

The euro also remains flat and is just below the key 1.35 level against the USD with any upward potential tempered by the Greece fallout. The Greek PM stated that he will not be going to the EU summit as a beggar and also that he expects a positive outcome from the summit. The deputy PM then threw in his two pennies worth by stating that if financial aid was not forthcoming from the EU, then it questions the concept of the Euro zone as a whole. Let us hope the EU summit provides some clarification and a solution is delivered as this has dragged on for too long…

The CHF is still gathering strength in the markets especially against the euro- hitting all time highs in the low 1.43’s. Swiss National Bank chairman Hildebrand has been discussing the Swiss economy and the strength of the Franc…he has stated that the SNB has means to fight the excessive France rise and that it can buy very large quantities of foreign currency. Therefore this is one to watch for intervention in the near future to weaken the Franc.

Discuss on this on the Currency Exchange Forum