POUND STERLING
Sterling received a fillip earlier today when leading credit ratings agency S&P confirmed the UK’s AAA debt rating. On the debit side, S&P’s report also noted that the UK’s economic recovery was ‘lacklustre’. If the Bank of England monetary policy committee opt to extend the UK’s quantitative easing scheme, then Sterling is likely to come under heavy selling pressure once again. NEAR -TERM OUTLOOK – NEUTRAL.
US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.5453
The Dollar has enjoyed steady gains on the day as concerns escalate regarding the state of Greece’s public finance. These fears have caused investors to shift into safe haven assets, causing the Greenback to benefit. Elsewhere, there was a rare ray of hope for the US real economy this afternoon, with the release of data which revealed that US manufacturing output unexpectedly increased last month. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.
EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1652
The Euro has suffered pronounced losses on the currency markets during today’s session following yesterday’s announcement by Greece’s Finance Ministry that it is set to miss its deficit reduction targets for this year and next, making a Greek debt default seemingly inevitable. This morning’s data which showed that Eurozone manufacturing output contracted at its fastest pace since 2009 last month, added to the downward pressure. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.
AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.6060
The Australian Dollar has once again lost ground against the majority of the other sixteen most-actively traded global currencies, following developments over the weekend in Greece, where the Finance Ministry announced that they would not hit EU/IMF targets for reducing their deficit in 2011 or 2012. Further downside is likely for the Aussie when the inevitable happens and Greece defaults. NEAR-TERM OUTLOOK – NEGATIVE.
SOUTH AFRICAN RAND – The Pound South African Rand exchange rate (GBP/ZAR) is 12.7238
The Rand has come under heavy selling pressure in recent months, seeing the GBP ZAR rate rapidly appreciate from 10.64 in the second week of July to break the 13.0000 level by the third week of last month. Over the past two weeks the rand has shown signs of staging a mini-recovery, however this move appears to have ended today as global investors scale back their appetite for risk over fears that Greece is heading inexorably towards a debt default. There could be further downside to come for the Rand. NEAR-TERM OUTLOOK – NEGATIVE.