Currency Rates

EURO/GBP - 1.145
US$/GBPS - 1.586
CHF/GBP - 1.684
CAN$/GBP - 1.685
AUS$/GBP - 1.802

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All eyes shift to the Bank of England today as the Monetary Policy Committee meets today for this month’s interest rate decision. When the MPC met in November and expanded the bailout funding by £25bn it made clear that it would wait until that ran out before assessing the next steps. Today is decision time – does the MPC expand funding, put it in hold or put an end to it? Conditions have improved with inflation at 2.9% over the last year, GDP at 0.1% in the last quarter and consumer lending conditions improving. It will remain to be seen which path the Bank chooses (many expect the funding to be put on hold) but regardless, there is likely to be some sterling volatility as a result give us a call to make sure you don’t get caught out.

In the Euro zone, the European Central Bank meets for their interest rate decision. They are expected to keep their heads in the sand, as contrasting data in the Euro zone negates the need for any shift in monetary policy. The press conference afterwards is likely to cause some movement, as Bank President Trichet will be grilled over the effect of Greece’s deficit on the region.

In the US, the dollar strengthened against the euro to the highest level since July as concerns over European countries and their ability to cut their deficits caused increased demand for the US dollar. Yesterday’s employment data came in better than expected, but the key figures are out tomorrow in the form of the Non Farm Payrolls. To erase doubts over the GDP figures which showed growth (with no jobs) the US economy needs the labour market to follow suit – if the data is better than expected tomorrow you may well see the US dollar continue to push towards the US$1.50/£1 level as the currency becomes a more attractive proposition than sterling.

Elsewhere, New Zealand unemployment jumped unexpectedly in the fourth quarter and Australian retail sales dropped in December. This does not bode well for the Australian dollar as following interest rate hikes and the removal of stimulus, the economy seems to be faltering. This could mark a turnaround for sterling against the Australian dollar so let us help time your entry into the market – speak to a trader today.