The currency blog

Graham Hunt has worked in the property market for the best part of a decade in Spain and thought it was about time to give back the benefit of that experience to those thinking of coming to Spain to live with a series of interviews with successful people in Spain.

Different jobs, different businesses, same results. Each one of them has found a different niche and lives comfortably here. They are from all parts of Spain from the islands of Lanzarote and Mallorca to Madrid, Barcelona, Valencia of course and Andalucia.

Listen to those who have moved here and moved here successfully. They provide you with a road map and ideas about what you can do to make sure you succeed on your move to Spain whether that move is short or long term.

Those interviewed included Currencies Direct’s Keith Spitalnick. You can listen to Keith’s interview here:

keith-spitalnick-interview

and get the rest of the audiobook and ebook series here

Information courtesy of Graham Hunt

Following over two weeks of selling pressure the market seems to be running out of new reasons to sell the pound. We have already heard lots about a hung parliament, the deficit, weak growth prospects, QE and negative M&A flows. The pound has undoubtedly struggled but it seems to have found a bottom for now at 1.50 against the USD and 1.10 on the euro. Recent news that hit the pound was that the European Commission is concerned about the UK’s bulging deficit and the UK needs to dramatically enforce it’s fiscal programme. This did lead the pound lower but it has bounced back and this to me signals that we may have limited downside potential unless we see anything new to attack sterling. The key level against the USD is for a move back over 1.52.
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Sterling has started the week badly falling against the USD and the EUR.  On Friday the pound managed to move over 1.52 against the USD following news that an opinion poll indicated an outright Conservative majority- if Sterling could vote it would vote conservative!  However the weekend polls have again pointed towards a hung parliament helping to soften the pound.  In addition we had UK Right move house price data which did not paint a good picture for the housing market.  In addition the ratings agency Moody’s affirmed that the UK’s fiscal position has been subject to “extreme deterioration”, which was negative for the pound.  However they did affirm that the UK is still a long way from anything that would prompt a ratings outlook change.  They also commented that the post election budget will be of much greater importance than the March 24th budget. Although the pound remains for now over 1.50 against the USD, the fact that it could not sustain a move over 1.52 maintains the bearish trend.
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The euro has gained over a cent against the USD. Economic data certainly helped the move with Euro zone Industrial Production coming out much better than expected at +1.7% month on month and +1.4% year on year, the expectation was for +0.7% and -1.9%. The positive industrial production data can be held in stark contrast to the dire figures from the UK earlier in the week- the weather in the UK was blamed for the downturn in the UK…mmm they had bad weather in Europe too. Another reason for euro strength could be attributed to a US investment bank’s recommendation to go long on EUR/USD with a target of 1.45…could be a good position. Speculation that authorities will help tackle Greece at the EU summit on Thursday and news that ECB president Jean Claude Trichet will leave Sydney early to attend a gathering of EU leaders is helping confidence in the euro. Although the euro has weakened since December the downturn, recently it has consolidated well and market confidence could easily return to buying the euro if the EU handle the Greece problem effectively.
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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.
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That is for sterling and the UK economy as Industrial production for January and manufacturing output came out much weaker than expected. Industrial output was -0.4% month on month and manufacturing output was -0.9%. Thus we have more negative feedback on top of yesterdays negatives to further reinforce the selling pressure on sterling. Gordon Brown was also speaking this morning on the UK economy; he affirmed that the recovery is in the early stages and remains fragile. There will be a budget in 2 weeks time which will set out more detail on deficit reduction- certainly needs to. As we have discussed sterling needs some clarity and so do the credit rating agencies.
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