Sterling continues to struggle as macroeconomic data continues to disappoint
19/Feb/2013 • Currency Updates•
News for Sterling is far from positive as the currency is currently dwindling near seven-month lows against the US dollar off the back of Mario Draghi’s down beat rhetoric, and continues to struggle against other major currency pairs.
The pound was also pushed lower as risk sentiment continued to falter on the downbeat outlook for UK growth as macroeconomic data continues to disappoint, keeping investors away from the British currency.This is further supported by financial institutions such as hedge funds selling more pounds than they are buying for the first time in five months, creating downward momentum.
The euro fell marginally against the US dollar after a mildly dovish speech by European Central Bank president Mario Draghi yesterday, stating that the exchange rate was not a target for policy and that inflation expectations were firmly in line. He also mentioned that risks to the euro zone remained to the downside, posing a threat to the wider global economy as well as the strength of the euro zone’s own currency.
Business sentiment within the core of the eurozone still remains high as businesses are cashing in on easy monetary policy to borrow at record low rates, however the same cannot be said for the periphery, due to the struggle to find market funding and a €65bn reduction in net bank lending.
Markets remained steady after the G20 meeting in Moscow and Draghi’s speech yesterday, however volatility should look to pick up starting with German ZEW out later this morning.
The dollar suffered a quiet day due to Presidents Day on Monday with all movements as a result of information from external comments. The dollar index traded flat at 80.6 points.Today promises much of the same as the only data released later is a mixture of tier one information. Volatility should look to increase come Wednesday with finished goods PPI as well as the FOMC minutes meeting.