Pounds Dollars Exchange rates May 2008

Wednesday 28th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9811

Consumer confidence in US points to lowest level of spending since 1950’s.

US Dollar:
The dollar gained yesterday against the euro and sterling on weaker than expected data out of the eurozone and an ease in crude oil’s recent rally. This was despite official data showing falling consumer confidence in America allied to the continued drop in house prices and pointed to the lowest level of spending since the 1950’s. According to the Conference Board’s consumer confidence index, the outlook of America's last month was the most gloomy since October 1992, with expectations for the future declining even further.

At the same time, new data showed that house prices are falling almost five times as quickly as in the last US recession in 1991. Minutes released today showed that there was a clear seven-five split among the twelve regional Federal Reserve Banks against cutting the discount rate in the weeks leading up to the Fed’s April 30th rate cut decision.

Data at 1.30pm: Durable Goods orders expected at –1.1% from –0.3% previous. Ex Trans expected at –0.5% from 1.5% previous.

Tuesday 27th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9748

Dollar remains on the back foot as markets await key economic data.

US Dollar:
The dollar was confined to extremely narrow ranges against its major rivals yesterday as the US and UK markets were closed for the holiday. The dollar remains on the back foot from last week as the markets look towards key economic data to be released this week from both the US and eurozone. Market players will be watching to see if the new data justifies the dollars retreat that began early last week.

According to former Federal Reserve Chairman Alan Greenspan, the US is still more likely than not to have a recession in spite of the relative stabilization in the economy in recent weeks, he told the Financial Times.

Key data to watch out for this week starts today with Consumer Confidence & New Home Sales, then later in the week we have Durable Goods, GDP, personal Consumption and Personal Income.

Data at 2.00pm: S&P, at 3.00pm Consumer Confidence expected at 60.1 from 62.3, New Home Sales MoM expected at 0.1% from –8.5% previous.

Friday 23rd May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9789

Dollar halts two days of losses after jobs report.

US Dollar:
Yesterday saw the dollar halt its losses from the previous two days after better than expected US jobs report gave investors a reason to buy an oversold buck. Previous poor data from the US combined with positive data from Europe had put the dollar under pressure, but a pause for the greenback corner has been welcomed in the US. This may only be short lived however, as key data from the US next week is expected to worsen such as consumer confidence and new home sales.

Should eurozone inflation data come in stronger than expected, we may see the dollar slide and head back towards the $1.60 level. Against sterling, the dollar has also had a bad time, hitting $1.9850 yesterday before falling back to just under $1.98 this morning.

Short term, the psychological $2.00 barrier doesn’t look far off and may be breached should US data come in negative.

Data at 3.00pm: Existing Home Sales MoM expected at –1.6% from –2.0% previous, for month of Apr expected at 4.85M from 4.93M previous.

Wednesday 21st May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9650

BoE & Fed to release minutes today from previous central bank meetings.

US Dollar:
The dollar was back under pressure yesterday as the euro and yen rallied against the greenback. The dollar hit a three week low against the euro to hit $1.5684 and also a week low against sterling to break through the $1.97 level.

Data released yesterday showed US wholesale prices climbed modestly in April, given relief by subdued food and energy costs, but the core rate of inflation rose at twice the rate expected on Wall Street. The producer price index for finished goods rose 0.2% on a seasonally adjusted basis after a 1.1% increase in March.

Economists surveyed by Dow Jones Newswires had called for a 0.4% increase in the overall index for April.

Data at 7.00pm: Fed Releases Minutes.
 

Tuesday 20th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9550

US dollar gains slightly on back of gain in leading indicator figures.

US Dollar:
US leading indicators rose for the second month suggesting any slowdown in the US economy could be limited.

Activity rose 0.1% in April the same increase as in March and defying expectations for a small negative reading. The dollar was also helped by more gains in the US stock markets. Even with the dollars gains against the euro, pound and yen, the greenback remains in the same tight ranges it has been in throughout May.

Since yesterdays opening, cable is only down 15 pips, and against the euro there is only a negative 12 pip movement in the favour of the euro. Key economic data due out in Germany may lead euro—dollar to move in the favour of the single currency.

Data at 1.30pm: PPI YoY expected at 6.6% from 6.9% previous, PPI ex Food & Energy YoY expected at 2.9% from 2.7% previous. Fed’s Kohn to speak at 2.00pm.
 

Friday 16th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9486

A slew of US data paints gloomy picture for worlds largest economy.

US Dollar:
The dollar was trading within a fairly narrow range yesterday and this morning as currency analysts see the Federal reserve coming in line with other central banks after several members recently indicated a pause in cutting interest rates and concern for inflation.

A slew of US data on jobless claims, industrial production, housing and manufacturing continued to paint a gloomy picture for the world’s largest economy.

Looking ahead to data for today:
Data at 1.30pm: Housing Starts expec at 935k from 947k previous, Building Permits expec 910k from 927k previous, University of Michigan Confidence expec 62.5 from 62.6 previous.

Thursday 15th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9477

US CPI data shows economy slowing down, easing pressure on inflation.

US Dollar:
The dollar had a relatively good day yesterday, hitting a 4 month high against the pound at $1.9365 and a also saw the greenback hit below the $1.54 level against the euro. The dollar was riding piggy back to firmer US stock markets and a growing sense that the worst of the US financial crises has passed.

US consumer prices were under wraps last month, especially when food and energy prices were stripped out, further evidence that the economic slowdown is easing some of the inflationary effect of recent sharp gains in food and energy process. At a minimum, the CPI data suggest inflation hasn’t become embedded in the economy, meaning officials can keep interest rates low in response to the slowing economy. The dollar has lost a little of its gains in early morning trade today.

Data at 1.30pm: Empire Manufacturing expec at0.0 from 0.6 previous, At 2.00pm Net Long-Term TIC Flows expec at $62.5B from $72.5B, At 2.15pm Industrial production at –0.3% from 0.3%, At 3.00pm Philly Fed expect –19.0 from –24.9 and at 6.00pm NAHB Housing Market expec 20.0 unchanged.

Wednesday 14th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9408

US Dollar:
The dollar rose against a basket of currencies yesterday with help from US retail sales, which offered signs of hope for the economy. Analysts said the dollar could rebound back towards recent highs against the Yen at Y105.70 and break through the key level of $1.54 against the euro.

Against the pound, the dollar is currently testing the $1.94 the figure which has proved to be a strong level of support previously. The dollar also drew support from various Federal Reserve speakers yesterday, who seemed to focus on inflation concerns, a sign that interest rate cuts that have hurt the dollars yield may indeed be on pause.

Fed Chairman Ben Bernanke also added that the central bank’s liquidity measures have led to improved market conditions, but did warn that market conditions are still far from normal.

Data at 1.30pm: CPI YoY expected at 32.9% from 4.0% previous.

Tuesday 13th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9510

Fed member suggests US is less likely to pause in interest rate cuts.

US Dollar:
The dollar eased up on its gains against the euro but did rally against the pound as poor economic data was released from the UK. We saw a gain against the pound of just under 2 cents from $1.9663 to $1.9488.

Federal Reserve Bank of Chicago President Charles Evans said yesterday that the current net stance of monetary policy is accommodative and this is appropriate in order to address the way we see the sluggish economy unfolding in 2008. His remarks may have suggested that the Fed is less likely to pause from cutting interest rates, as many market participants believe.

This week sees quite a lot of economic data due in the and the markets will watch closely for any indication on future monetary stance.

Data at 1.30pm: Import Price Index expec 15.0% from 14.8%, Advance Retail Sales expec –0.2% from 0.2% previous.

Thursday 8th May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9533

Greenback rallies to 6 week high against the euro.

US Dollar:
The dollars rally continued yesterday as it hit a 6 week high against the euro to be trading at $1.5344, and a 3 month high against the pound to hit $1.9537. This seemed to be on the back of talk of a hold on future interest rate cuts, talk that the worst may be over with regards to the credit crises in the US and better than expected US data.

A warning by the Federal Reserve about inflation worries , even suggesting the potential need for a rate hike also rallied the greenback.

Nonfarm business productivity rose by 2.2% in the first quarter, beating expectations of a 1.7% rise. Weak economic data in the eurozone also helped the dollar make gains against the single currency, while the pound also suffered with weak economic data.

Data at 1.30pm: Initial Jobless Claims expected at 375k from 380k previous. Speaker: Fed Chairman Greenspan to speak at 5.30pm.

Thursday 1st May 2008 Interbank
G BRITISH POUND / US DOLLAR 1.9855

Fed rate decision comes in at 0.25% cut as expected.

US Dollar:
As expected the FOMC meeting resulted in a decision to cut interest rates reducing the Fed funds rate to 2%. The accompanying statement seems to imply that the Fed would like to think it has done enough through its ‘substantial’ rate cuts to warrant holding rates at 2% through to at least June.

USD GDP for the first quarter came in at 0.6% annual growth and employment figures were better than expected, both sets of data would support less aggressive interest rate cuts in the future.

On the downside, mortgage approvals fell another 11.1% to the lowest point of the year signalling that the economic situation in the US could deteriorate still further. The statement by the Fed left FX markets largely unchanged with the Euro briefly moving over 1.56 and then falling back.

Big figures out today will be US Initial Jobless Claims at 1:30 pm and ISM Manufacturing at 3:00pm

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