In the last seven days the pound covered most of its cent-and-a-half range four times, with seven noticeable changes of direction. The overall result was the same as it had been in the previous two weeks; no net movement for sterling against the euro.
Although the market has not exactly stunned itself into inactivity – exchange rates are still moving – investors are suffering from crisis fatigue. They have been exposed to EU political dithering for so long that they have lost the will to panic. More recently, an outcome to the negotiations surrounding the controlled default of Greece has been just around the corner for several weeks. It still is, or so those involved in the discussions promise, but the coin is still spinning. Until it comes down on one side or the other there is no way of knowing whether there will be an orderly rescheduling or a disorderly default.
Similarly with the threat of “contagion” in southern Euroland, summit meeting after summit meeting has failed to deliver anything remotely akin to Action Today. The latest wheeze – the fiscal compact that the German chancellor believes will restore investors’ confidence in Italy, Spain, et al – will take years to have an effect. It might even lose the support of France if François Hollande replaces Nicolas Sarkozy as president this summer; M. Hollande’s manifesto includes hiring 200,000 public sector workers and lowering the retirement age, hardly a recipe for reducing the nation’s debt.
The European Central Bank is doing an admirable job, handing out money to banks as though it is going out of fashion, but Euroland leaders are perceived to be doing nothing. David Cameron tried get them moving in his address to the World Economic Forum in Davos with a call for “bold and decisive action”. He said the three things they must address this year are “Greece, banks and firewall”. But his words met with more sympathy among investors than they did in the euro zone corridors of power.
Britain’s prime minister has problems of his own though. Whilst the chancellor’s cost-cutting is having a visible effect on reducing the deficit, it is doing little to help the economy. Provisional figures released this week showed just 0.8% growth in gross domestic product in 2011. The output actually shrank by -0.2% in the last three months of the year. And Britain is likely to be saddled with that difficult trade-off for years to come. Bank of England Governor Mervyn King said as much in a speech on Tuesday; “the path of recovery is likely to be arduous, long and uneven”. But he said it would all be alright in the end; “There is no reason to despair”.
So the game goes on. One day the euro is hot, the next it is not. Since before Christmas the sterling/euro exchange rate has gone precisely nowhere. Against that track record it would be presumptuous to expect it to go anywhere in the coming week.
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It seems like while the rest of the world will be heading to Britain, Britons everywhere will be going abroad.
According to the latest figures from travel association ABTA, more than one in ten UK adults (12 per cent) is planning to head overseas while London hosts the 2012 Olympic Games, specifically in order to avoid the event.
The Olympics kick off exactly six months from today on July 27th, and certain countries will make a particular good escape during the summer months.
Egypt is at its hottest from May to August, and the hotel resorts are usually less expensive and less crowded.
July and August are the best months to visit Iceland, as travellers can enjoy more daylight hours and warmer temperatures.
If you're looking to go further afield, Indonesia is one of the best destinations at this time of the year, with its beautiful beaches, lively culture and temperatures ranging from 25 to 30 degrees.
According to ABTA, those who are less than enthused about the global sporting event but won't be able to go abroad (nine per cent) will simply seek out areas of the UK that are less gripped by Olympic fever.
Posted by Emmanuel Addy
London, Paris, Rome – sometimes a special occasion demands a long-haul destination.
For that, we have New York, a city abundant in perfect places to take your loved one.
That's probably why it's the setting of so many romantic films.
Central Park is a definite must-see for any couple, who can take an intimate carriage ride around the park, or a boat trip below Bow Bridge.
For breath-taking views of the city, head for the Empire State Building.
As long as your loved one isn't afraid of heights, it's the perfect opportunity to re-enact the most romantic scene from Sleepless in Seattle.
Of course, for a more relaxing evening, simply spend a few hours in one of the city's many impressive restaurants.
At the River Cafe in Brooklyn, you can enjoy delicious food with a stunning view of the Manhattan skyline.
If you're looking to impress your loved one with more Parisian fare, there's always La Grenouille, which offers classic French dishes including foie gras, frog legs and chocolate soufflé.
Posted by Emmanuel Addy
United States Dollar:
A quieter day’s trade yesterday saw cable move within a smaller range. Sterling should have started on the back foot Thursday morning as UK retail sales suffered its biggest fall in three years. It suggests that shoppers firmly shut their wallets after the Boxing Day sales. The FED euphoria from Wednesdays release kept Sterling sitting high against the US Dollar and the currency pair peered over 1.5720. An increase in US Durable goods orders helped keep the euphoria going in the US session as a 3 % climb surpassed the predicted 2.1 %. The positivity dwindled off as the US session continued with the dampener coming from unemployment and new home figures. Both were disappointing releases albeit they didn’t come in far off their forecast figures. This has seen cable trade within a 50 pip range yesterday with a Thursday high of 1.5728 reached. GBP/USD sits in the mid of this range at 1.5695 this morning.
Euro:
The single currency comes off recent gains against the USD and GBP. Talks between Greece and its private creditors progressed on Thursday as they continue to find a resolution in restructuring the debt. These talks continue today with the aim of sealing an agreement within a few days. Despite the chatter from Greece breeding some relief, it now seems Portugal is joining Greece in the EZ and market concerns. Portuguese 5 and 10 year government bond yields came under pressure yesterday after hitting Euro-era highs and the nation possibly look set to follow Greece in requiring another bailout or debt restructuring. The roll on effect from Greece to Portugal only highlights whether Italy will fall back into the same situation. Euro therefore has fallen of the FED gains from Wednesday / early Thursday and sits at 1.3112 versus the Greenback and 1.1972 versus the Pound.
Australian and New Zealand Dollars:
The Aussie and Kiwi remain strong and have maintained their recent gains. The antipodean currencies are off the highs versus the Greenback after the latest news from Europe dampening demand for risk, but the downward movement for the currency pairings has been corrected overnight after the NZ trade balance release. Record-high value for dairy increased exports by 4.3 % helping the surplus reach 338 million dollars in December 2011. This has seen the NZD push higher and opens at 0.8235 versus the USD. AUD/USD currently sits at 1.0641. Sterling see no real change in it’s stance against the Aussie and Kiwi and open at 1.4752 and 1.9063 for this morning.
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EURO/GBP – 1.1982
US$/GBP – 1.5668
CHF/GBP – 1.4454
CAN$/GBP – 1.5741
AUS$/GBP – 1.4778
ZAR/GBP – 12.2922
JPY/GBP – 120.88
HKD/GBP – 12.169
NZD/GBP – 1.9104
SEK/GBP – 10.659
AED/GBP – 5.7610
US$/EURO – 1.3092
INR/GBP – 77.62
Sterling fell to a four week low against the euro on Thursday as investors became optimistic over progress in Greek debt talks and concerned over UK economic weakness. UK data from the Confederation of British Industry showed there was a far worse contraction in sales than had been anticipated. Sterling strengthened against the US dollar, hitting the highest level against the US currency since December 22nd after breaking through $1.57/£1 on stronger. However, poor GDP figures on Wednesday and the further likelihood of poor UK data are set to limit sterling’s upside against the US dollar over the longer term.
In the euro zone, the euro hit a 5 week high against the US dollar on speculation over the progress of Greek debt negotiations. Rumours circulated that Greece’s private creditors had agreed to lower the amount paid to them as interest on their bond holdings in order to reach agreement on time and avoid a messy default. This is set to dominate the headlines so call in now for a live exchange rate.
In the USA, the US dollar weakened yesterday and global stock markets gained as markets reacted to optimism over a potential solution to the Greek debt situation. In addition, the announcement earlier in the week that the Federal Reserve would keep interest rates on hold for up to 2 years helped drive risk appetite and deliver the first signs of a resurgent carry-trade. Out later today is US GDP data so call in now for a live exchange rate.
Elsewhere, Gold prices were steady at their highest level in over a month on the news of the Fed’s policy stance. Low interest rates make gold more attractive and help investors hedge against inflation, as they gain from increasing commodity prices that inevitably follows cheap borrowing costs.
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Headlines:
- Mixed messages from Greek debt talks see’s euro remain choppy
- Dollar makes back some losses as risk appetite is reduced
- Sterling manages to hold firm against majors despite weak retail figures
- World finance leaders continue annual forum in Davos, Switzerland
US Dollar:
This week has been pretty poor for the dollar as it saw losses across the board as risk appetite returned. Today has seen somewhat of a fightback for the buck as the US currency has made back some losses versus the pound and euro.Yesterdays afternoon US data was not exactly all singing and dancing so some risk was quickly lost. Looking ahead to today, the greenback’s position will be pretty flat ahead of a report that will probably show U.S. economic growth accelerated in the fourth quarter of 2011, supporting demand for riskier, higher- yielding assets. U.S. GDP rose at a 3 percent annual rate after advancing 1.8 percent in the previous quarter, according to forecasts. Fed Chairman Ben Bernanke said on Jan. 25 the central bank is considering additional bond purchases to boost growth after extending its pledge to keep borrowing costs low. The Fed has already bought $2.3 trillion of debt in two rounds of quantitative easing known as QE1 and QE2. The US economy looks firm at the moment and this will continue to be supportive of risk sentiment among the markets. The Fed’s easing stance has put the dollar under dual selling pressure. The dollar and the yen were both poised for a 1.4 percent weekly slide against the 17-nation euro.
Pound:
Sterling’s performance against the dollar was riding on a high up until last night as we saw a 10 day high hit when cable traded over the $1.57 handle. This was despite the weaker than expected UK economic data which was released in the late morning trading session. CBI realised sales came in at -22, a whole lot lower than the expected figure of -2. This sent GBP/EUR lower, despite the single currency’s issues with the ongoing Greek talks regarding the eurozone debt crisis. Sterling lost around half a cent on the single currency to push GBP/EUR to the lower 1.19 levels. This morning has seen a slight turn around in the pounds favour as mixed messages keep being fed out by eurozone leaders regarding the progress on the Greek debt talks.
Euro:
Mixed reports were firing out from all angles yesterday regarding the ongoing debt talks regarding Greece’s debt issues. This saw the euro bounce around against the majors as initial reports led you to believe that we could see a light at the end of the tunnel with regards to getting a resolution. This initially rallied the single currencies in Thursday afternoons trading session. This morning has seen that position change yet again as the euro has been sold off against both the dollar and sterling. This week has also seen the worlds finance ministers descend on the annual forum in Davos, Switzerland, at another perilous moment, on top of the sovereign debt woes in Europe which are continuing to sap strength from emerging markets and threatening global growth. This has contributed to the euro’s decline in recent weeks to send the single currency lower.
General:
Canada’s dollar rallied to parity with its U.S. counterpart for the first time in almost three months as commodities rose after the Federal Reserve pledged to extend its freeze on U.S. borrowing costs. The Canadian currency reached the strongest level since Nov. 1 and headed for a 1.1 percent advance on the week. Crude oil, the nation’s biggest export, reached a one-week high after the Fed signaled yesterday it plans to keep interest rates at almost zero through 2014. Canada’s dollar hit parity, and we’re looking for it to continue to gain against the U.S. dollar based on the Fed, higher oil and improving risk sentiment because of accommodative central banks.
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It looks like workplace pressures are starting to take their toll on even the most resilient travellers.
According to research from Direct Line, a lot of people are now skipping the traditional one or two-week holiday in favour of five-day or 'cinq-jour' breaks as a result of job stress.
But where to go if you have less than a week for an adventure?
Morocco is a good choice, as it's just a quick flight away and boasts warm sunshine and plenty of activities.
Your break can be spent trekking the Atlas mountains, shopping in the bustling souks or simply lazing on one of the country's many sandy beaches.
In nearby Spain you will find warm weather and accommodation to suit all budgets.
Andalucia is a particularly fine choice, as the picturesque town is also a great base for travelling to historic Ronda and attractive Marbella close by.
The beauty of Lisbon, Portugal's capital city, is well worth the short flight.
It's stunning scenery, warm atmosphere and eclectic architecture make it the ideal setting for a quick cinq-jour escape.
Posted by Emmanuel Addy
It seems like 2012 will be a good year to invest in the Nordic countries.
Experts believe that these areas are likely to host the strongest performing commercial property markets this year.
According to Darren Yeates of property consultancy Knight Frank, the markets in Sweden, Norway, Finland and Denmark should do well because of their robust economies.
He believes that Sweden will be particularly successful.
The country is in better economical shape than many other parts of Europe.
It has also seen a boom in tourism, partially thanks to the wildly popular Girl with the Dragon Tattoo novels by Stieg Larsson.
Mr Yeates also thinks that Poland's property market may do surprisingly well this year.
"It has had its elections, is politically stable, relatively high yielding and has a large, young and growing population," he said.
Furthermore, Poland appears to be getting wealthier, and is home to a number of large cities which could sustain new property developments.
Posted by Huw Jenkins
There is one romantic tradition that only takes place during a leap year.
Convention dictates that February 29th is the one day of the year when women may propose to their loved one.
One Lake District hotel is poised to provide the perfect setting for such an occasion.
The Castle Inn Hill hotel is offering special discounts to any lady who decides to pop the question while staying there.
Furthermore, any couple who then decides to have their wedding in the beautiful hotel grounds will be able to enjoy their wedding suite for free.
Castle Inn Hotel is just one of a number of romantic places in the scenic Lake District.
For one thing, it is home to some of the best restaurants in the UK, many of which are Michelin-starred.
Gilpin Lodge in Windermere offers superb dining and scenic views, making it perfect for an intimate meal for two.
Windermere is also home to England’s longest lake, offering an ideal place for a romantic boat trip.
If you’re feeling confident, you can even impress your loved one by hiring a row boat.
For a more relaxing journey, consider taking the train from Settle to Carlisle, which provides stunning views of the Yorkshire Dales.
Posted by Huw Jenkins
Headlines:
- Sterling falls vs euro on weak GDP, QE prospect
- Merkel Now Doubts That Greece Can Be Saved
- US interest rates to remain low until at least 2014
- Switzerland Must Be ‘Vigilant’ on Risks of Franc Limit to Euro, FSB Says
US Dollar:
Federal Reserve Chairman Ben Bernanke left no doubt yesterday that he and a majority of his fellow policymakers are prepared to resort to more quantitative easing under certain circumstances — possibly even if inflation is running above the Fed’s newly announced 2% target. Bernanke defended the Federal Open Market Committee’s decision to extend until at least late 2014 the period of “exceptionally low” short-term interest rates and went further in a post-FOMC press conference to assert that the Fed is prepared to do more asset purchases to hold down long-term rates if the pace of economic growth and job gains is deemed unsatisfactory and inflation remains low. Bernanke said that, unlike the European Central Bank and other central banks with an inflation target, the Fed will give equal weight to the two aspects of its statutory dual mandate — price stability and maximum employment. The dollar extended losses to hit a fresh five-week low against the euro this morning. The dollar is currently trading at around the 1.3110 level against the euro, and 1.5700 against sterling.
Pound:
Sterling fell against the euro yesterday, weighed down by data showing Britain’s economy contracted in the fourth quarter and by concerns the Bank of England will ease monetary policy even further. Britain’s economy shrank by 0.2 percent in the last quarter of 2011, below the consensus forecast for a 0.1 percent contraction. Growth for the whole year was just 0.9 percent, less than half the expansion recorded in 2010. The data underpinned expectations that the Bank of England will carry out more quantitative easing after minutes from the Bank’s latest meeting said further asset purchases were “likely”. “If they (BoE policymakers) are saying “likely” in the minutes that pretty much means definitely. Sterling is currently trading around the 1.1960 level against the euro.
Euro:
After backing Greece to the hilt for nearly two years, and additionally ensuring the support of her country, which contributes the most to an ongoing attempt by international lenders to save Greece, German Chancellor Angela Merkel now says she’s unsure if the debt-wracked country can be saved no matter how much money is poured into it. Merkel told the British newspaper The Guardian and five other leading European newspapers in an interview that two years of $152 billion in rescue money from the Troika of the European Union-International Monetary Fund-European Central Bank and attached austerity measures have failed to right Greece, which is sinking in $460 billion in debt. She said that Greece – starting its fifth year of recession – shows no signs of recovering.
General:
The Swiss National Bank (SNBN)’s franc limit against the euro may cause the country’s economy to overheat if authorities aren’t vigilant to its effects, according to a report by the Financial Stability Board. “The combination of the floor with a protracted low interest rate environment could potentially result in excessive credit creation and contribute to the build-up of imbalances in the domestic real-estate and mortgage markets,” the FSB said in an assessment of the nation. It’s “essential that regulators remain vigilant in monitoring trends,” the FSB said. The currency floor is a “bold stance against an overvaluation” of the Swiss franc, it said in the report published yesterday.
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