Euro Pounds Brief 18th January 2007

For Today's exchange rates Click the following link:
 

Euro Pounds Home

Thursday 18/01/2007

• Japan opts to keep rates on hold
• Sterling continues to climb; this time on employment data
• US economy growing at subdued rate; inflation still a worry
• US Inflation data due today
• Germany flooded by non-Euro currencies-Telegraph
• Oil firms after cold snap across the US

US Dollar:

Mixed news from the US Beige Book. As a whole the report showed that the economy was still growing,
however at a sub-trend pace. All Fed districts reported a continued ’softening’ in the housing sector.
The Manufacturing sector was described as extremely fragile. Despite this slightly bearish outlook the
Fed remain concerned about inflation, with the Fed’s Mishkin saying that ‘higher rates warranted’ if
housing adds to growth. Yellen notes that he ‘could not understand why markets had priced in aggressive
cuts for 2007’.
Today sees the CPI Inflation data for the US at 1330 with the headline figure expecting a 0.4% jump.

Pound:

The pound continued its upward trend yesterday gaining ground this time on employment data; UK
unemployment recorded its largest drop in almost two years. Traders shrugged off weak average earnings
data to push the pound higher versus the Euro and the dollar. With the BoJ’s decision to keep
rates on hold the pound hit multi-year highs versus the yen.
Today we have very little on the UK data front so we may see some consolidation in the FX market.

Euro:

The Euro gained some ground over the dollar in overnight trade following the fairly bearish Beige Book
report. Euro-dollar is still to break back above 1.3000 despite the weakening greenback.
A report in the Telegraph today highlights the growth of non-Euro denominated currency in regional
Germany. Up to 65 regional currencies will operate alongside the Euro in the near future. The growth of
these currencies has worried the Bundesbank enough to commission a report into the effects this may
have on the euro.

General News:

• Last night the BoJ opted to keep rates on hold in January causing the yen to drop dramatically
against the majors. Members voted 6-3 to hold rates. Curiously the Government bonds dropped
following the decision, speculating that rates will have to move in February.
• Oil firmed up yesterday as a cold snap swept the US causing 55 deaths and widespread power
outages. The current oil price is $53.52.

Interbank
Updated 18th January
GB POUNDS /US DOLLAR 1.9765
GB POUND / EURO 1.5244
EUR/USD 1.2963
GBP/JPY 239.60
GBP/AUD 2.5069
GBP/NZD 2.8416
GBP/ZAR 14.1107
GBP/CHF 2.4631
GBP/CAD 2.3189
GBP/SGD 3.0392
GBP/THB 70.249
GBP/HKD 15.4296