Sterling saw some selling yesterday after growth expectations have now been lowered by the BoE as PM Cameron reaffirms his commitment to austerity measures. There is expected to be corporate demand for the Pound at the € 1.2430-50 levels.

It also looks as though Sterling may have room to trade lower again versus the USD as we hold below the $1.6000 level. Minutes from the last Federal Reserve meeting showed some policy makers said further easing may be needed should the U.S. economy slow although the USD did not move and has held onto its strong gains.

                          

As speculation continues so to do the crisis talks. German Chancellor Angela Merkel and new French President Francois Hollande met in Berlin yesterday and will be expected to meet many times more in an attempt to tackle this recent crisis.

Stock markets have fallen with the USD the main beneficiary again. While in the UK’s we saw the our trade balance shrink yesterday, although for the second month exports to the Euro Zone shrank. Still, Sterling traded through technical support at $ 1.6000; a close below here would potentially see lower levels again although the Pound is resilient ahead of UK inflation report.

Lots of data to consider today including the FOMC’s minutes later this evening.

                          

Yesterday saw ratings agency Moody’s downgrade 26 Italian banks while Euro officials urged Spain to speed up banking reforms. Speculation over Greece’s exit from the Euro continues despite officials at the Euro group meeting reiterating that there can be no substantial change to the Greek program and that talk of a Greek exit from the EMU was “nonsense” and “propaganda”. To top it all off after being officially sworn in the newly elected French President Hollande immediately flies to meet German Chancellor Merkel.

All in all there is no good news for the Euro, however speculative positions are heavily weighted ‘short’ of the Euro so markets may take ‘a breather’ today.

Sterling and the USD have held onto their gains, although some profit taking has been seen ahead of a busy day for economic data.

                          

Foreign Exchange Rate Range GBP/USD 1.6097-1.6142

Foreign Exchange Rate Range GBP/EUR 1.2465-1.2504

Spain’s problems continue as independent inspectors are to be dispatched to audit the country’s stricken banks. This comes as part of a raft of fresh conditions imposed by Brussels in return for relaxing the country’s budget targets. No doubt that the markets will focus on the publication of EU growth and deficit forecasts released at 10.00am but right now the Euro remains under pressure.

So, once again the USD and Sterling are the main beneficiaries overnight. Stocks in the Far East traded lower after China’s industrial production data showed the lowest growth since April 2009. As a result, Sterling traded in a tight range versus the USD and held firm against the Euro (high in Far East 1.2504) as well as a broad range of currencies including AUD, NZD and ZAR as gold/oil both trade lower.

Foreign Exchange Rate EUR/USD currently 1.2934. Support 1.2700, resistance 1.3000.

Foreign Exchange Rate GBP/USD currently 1.6113. Support 1.6000, resistance 1.6300.

Foreign Exchange Rate GBP/EUR currently 1.2458. Support 1.2400, resistance 1.2700.

                          

Foreign Exchange Rates Ranges GBP/USD 1.6123-1.6151

Foreign Exchange Rates Ranges GBP/EUR 1.2444-1.2479

The Euro came under further selling pressure yesterday as the Spanish government announced that it would take a stake of 45% in the country’s third largest bank, Bankia, due to its exposure to troubled property loans. This pressure was further exacerbated by economists and officials increasingly talking of the exit of Greece from the Euro as early as 2013.

So, market sentiment remains in a ‘sell Euro rally’ mode as the Euro Zone political and fiscal problems persist. As a result, stock markets continue to fall with the USD and Sterling the main beneficiaries for the last week; with the Pound having now traded versus the Euro at its highest levels since November 2008, which technically targets € 1.2650+.

Today we have the MPC meeting where both rates and the Q/E target are likely to remain unchanged.

Foreign Exchange Rates EUR/USD currently 1.2959. Support 1.2700, resistance 1.3000.

Foreign Exchange Rates GBP/USD currently 1.6125. Support 1.6000, resistance 1.6300.

Foreign Exchange Rates GBP/EUR currently 1.2440. Support 1.2400, resistance 1.2700

                          

Foreign Exchange Rates GBP/USD 1.6128-1.6156

Foreign Exchange Rates GBP/EUR 1.2419-1.2444

The Euro opened below $ 1.3000 and technically could fall further should we hold below this level over the next few sessions.

The backlash against austerity measures in both France and Greece is adding to the problems for the Euro. Greece, in particular, is struggling as it looks extremely likely they will be returning to the polls after failing to create a coalition since the elections over the weekend.

Both Sterling and the USD remain the major beneficiaries against a basket of currencies, including commodity based currencies, as gold, oil and global stock fell over the last week.

The Pound now looks comfortable above € 1.2400, a level we have not seen since 2008.

Foreign Exchange Rates EUR/USD currently 1.2992. Support 1.2700, resistance 1.3000.

Foreign Exchange Rates GBP/USD currently 1.6149. Support 1.6000, resistance 1.6300.

Foreign Exchange Rates GBP/EUR currently 1.2428. Support 1.2400, resistance 1.2700

                          

Foreign Exchange Rate Ranges GBP/USD 1.6124-1.6119

Foreign Exchange Rate Ranges GBP/EUR 1.2386-1.2422

The pound traded within sight of the 3 ½ year high against the Euro that was hit on Monday after the Greek and French election results cast doubt on politicians commitment to austerity measures aimed at tackling the Euro zone debt crisis.

In the near term Sterling is expected to hold on to its gains against the common currency. However, there is a worry that if debt contagion and economic slowdown in the Euro zone starts to effect the UK, the Bank of England may consider extending the QE programme to boost the economy. For now though The MPC is expected to keep the total to 325BLN when it meets later this week. Against the dollar, the pound remains reasonably steady, although it could be vulnerable to sell-offs in EUR/USD which hit a 3 month low yesterday.

Apart from German industrial production released at 11.00am there is no major economic data due today, but the market will be listening keenly for comments from ECB president Draghi due at 1.30pm.

Foreign Exchange Rate EUR/USD currently 1.3138. Support 1.3000, resistance 1.3300.

Foreign Exchange Rate GBP/USD currently 1.6178. Support 1.6000, resistance 1.6300.

Foreign Exchange Rate GBP/EUR currently 1.2312. Support 1.2100, resistance 1.2400

                          

Foreign Exchange Rates Ranges GBP/USD 1.6172-1.6195

Foreign Exchange Rates Ranges GBP/EUR 1.2298-1.2314

Those who had expected a change of rhetoric from ECB President Draghi or even a change in monetary policy were disappointed. He admitted that recent data had been below expectations but one thing was obvious: they will wait to see the economic effects from the second round of the 3 year loans (LTRO) made to the banks. Draghi also stated that the economy will grow albeit slowly towards the second half of 2012. The Euro was sold initially to €/$ 1.3100, but ended the day unchanged at 1.3150.

Sterling is also unchanged despite the fact that the Labour Party made significant gains in yesterday’s local council elections.

Market sentiment remains Euro negative ahead election results in France and Greece over the next few days.

The U.S. non-farm payroll data due today will probably dictate the next short term direction for the US Dollar which has held onto its small gains of the last 48 hours.

Foreign Exchange Rates EUR/USD currently 1.3138. Support 1.3000, resistance 1.3300.

Foreign Exchange Rates GBP/USD currently 1.6178. Support 1.6000, resistance 1.6300.

Foreign Exchange Rates GBP/EUR currently 1.2312. Support 1.2100, resistance 1.2400.

                          

Foreign Exchange Rates Ranges GBP/USD 1.6170-1.6196

Foreign Exchange Rates Ranges GBP/EUR 1.2300-1.2320

Western Union the money transfer services provider is looking in to extending its business to the remittances segment within India.

With over 100,000 agent locations across this country, it is considering providing person-to-person payment services between cities.

“India has witnessed steady growth of rural to urban and intra-state migration. All such people desire to send money home to support their families. If the opportunity presents, we are keen to play a role in domestic money transfers,” said Kiran Shetty, managing director for India at Western Union.
The company has experience in conducting the domestic money transfers in America, Philippines, Indonesia, Australia and New Zealand

The Euro trades with a softer tone after yesterday’s weaker economic data from France, Germany and Italy. Both the USD and Sterling are the main beneficiaries.

There is speculation that the ECB may announce a rate cut today with the next psychological support to the downside at €/$ 1.3000.

Commodity currencies are also weaker today (in particular NZD), all this ahead of tomorrow’s U.S. non-farm payroll data.

UK service sector PMI is due this morning, any pick up should see further gains for the Pound.

Foreign Exchange Rates EUR/USD currently 1.3124. Support 1.3000, resistance 1.3300.

Foreign Exchange Rates GBP/USD currently 1.6166. Support 1.6000, resistance 1.6300.

Foreign Exchange Rates GBP/EUR currently 1.2301. Support 1.2100, resistance 1.2400.