Daily Market Brief – 16th July 2015

Sterling looking strong

Quote of the day: “If you hit the target every time, it’s too near or too big”

July 16th: Highlights

  • British Pound surges above 1.43 against Euro
  • UK unemployment rates rise – first time in 2yrs
  • GBP/AUD hits highest rates since 2001
  • Japanese economy continues to recover

Sterling Comment

Sterling dropped on the open following poor employment data. UK unemployment rose for the first time in two years. The move to 5.6% (from 5.5%) was largely unexpected, flying in the face of the trend. Employment figures have steadily improved in the UK in the last couple of years – remember that a 7% unemployment target was a part of Mark Carney’s early forward guidance policy. Figures rose in May, coupled with salary growth failing to hit targets. Sterling recovered late in the day as investors bought in to comments made by Bank of England’s Mark Carney regarding interest rates.

This morning GBP/EUR has made a significant surge, trading over 1.43 levels at 7-yr highs against the Single Currency.

GBP/USD is trading in the region of 1.5615.

Greeks get approval in Parliament

Riots may have kicked off in the streets of Athens, but the Greek Parliament has approved an historic third bailout. The government had to rely on minority coalition partners and votes from the opposition, which calls into question the strength of support from his party. Unsurprising, when the deal includes austerity measure needing wage and pension reforms (when the Greek people recently voted against that), but right now that’s another problem for another day. For now, they have taken the necessary first step towards securing EUR 86bn bailout funding. Eurozone ministers have agreed a EUR 7bn Euros bridge loan as a stop-gap to the bailout money.

The IMF produced a rather searing report questioning whether Greece would ever be able to repay this extra borrowing, or stage sufficient economic recovery. But everyone seems keen to put the financial reality to one side for a moment and celebrate that Greece, it would seem, are back from the brink.

Even the Treasury seems to have backed down a little. Osborne’s position of any involvement of UK money being involved was ‘complete non-starter’, but now co-operation is being prepared, provided the cash is guaranteed and British taxpayers’ money is ‘not on the line’. More ‘hard talk’ from George.

If you are a Euro buyer or seller, log on to compare live quotes at this volatile time OR get in touch with your Personal Currency Concierge. It pays to let us shop around for you.

Global Comment

The EUR/USD pair fell in yesterday’s late afternoon session following Yellen’s remarks that the central bank is on track to raise interest rates prior to the end of the year. Of course, everything remains data dependent, but the focus shifted slightly from when they will start, to how fast other increases may follow. EUR/USD is now trading at 1.0893.

The Aussie Dollar has weakened following poor China data releases. China is Australia’s top trading partner. GBP/AUD hit it’s highest rate since 2001, with over a 1.22% surge. The pair is trading back slightly at 2.1136.

CAD fell to six-year lows yesterday after the Bank of Canada cut its overnight rate and was more conservative over its growth forecast for this year. There is a more cautious outlook for investment in it’s famed energy sector. GBP/CAD finished trading yesterday at 2.0228 gaining a full 1.7% on the day.

Today the ECB meet for their monthly policy meeting. Expectations are for Greece to dominate proceedings, specifically what plans the ECB has for the ELA and how long they expect the capital controls to remain in place. We mustn’t get carried away here – Greek banks are still closed. Oh, and lest anyone forget, China is still a mess.

Thanks for reading. Have a great day!

Morning mid-market rates – The majors
48-GBP GBP > USD 147-USD = 1.5653
48-GBP GBP > EUR 45-EUR = 1.4191
45-EUR EUR > USD 147-USD = 1.1030
45-EUR EUR > GBP 48-GBP = 0.7046

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Paul Plewman
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Paul Plewman, Director of Sales & Operations, has over 10-yrs experience in International Payments before joining the CurrencyTransfer.com team. Follow Paul on Twitter @fxplew

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