The Pound Sterling Live - The Heart-Beat of the British Pound

Friday 14th September: Aggressive cuts to pound euro forecasts at Jyske Markets

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Category: The Pound Sterling Live - The Heart-Beat of The British Pound

Published on Friday, 14 September 2012 07:52

Written by Sam Coventry

14:30: Jyske Markets slash forecasts for GBP/EUR

The pound sterling (Currency:GBP) is sharply lower against the euro this afternoon, it appears that key support for the currency pair has been broken. GBP/EUR is half a percent down the 1.2372.

And expect things to get worse warn Jyske Markets. The latest exchange rate forecasts from the Danish bank see the pound losing so much ground that in three months the rate ends up at 1.1904.

However, in 6 months rate is forecasted to hit 1.17, but it recovers from there heading up to 1.2198.

The pound dollar forecasts are: 1,64 in 3 months, 1.62 in 6 months, 1.56 in 12 months.

12:40: UK economy is forgotten amongst all this US Fed and ECB business

 Is the UK currency is left in the shadows of that come-back kid, the euro, it is all to easy to ignore the fundamental UK economic picture.

"The UK economy has been forgotten in the flurry of recent global central bank meetings. This week, the UK will be back on the market agenda and the country is likely to find itself in a much better position than it was before all the distractions," says Monex Europe FX Analyst, Eimear Daly.

According to Daly, the threat of quantitative easing at the Bank of England has been take off the cards:

"The Bank of England's board members have already been commenting on the improved outlook for the UK, ahead of the minutes being released on Wednesday. Ben Broadbent noted that our employment data, which has been surprisingly resilient, is a better indicator of the economy than even GDP. Another member noted that the ECB policy decision had the potential to give a big boost to the UK.

"Their sunny optimism is justified. Trade data showed the UK is slowly closing off its trade deficit, retail sales pointed to renewed confidence in the economy and industrial production surged to its highest level in 25 years. Previous data has underestimated the strength in the UK economy and the evidence coming through shows the UK is clawing its way out of recession. Further QE in the UK is off the cards for now."

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12PM: Sterling's fightback against the euro proves futile!

The UK currency is now slipping against the euro as markets go absolutely moggy. The FTSE 100 is closing in on 2 pct day-on-day gains, an occurrence you don't see often.

The pound euro exchange rate is 0.3 pct lower at 1.2399. The pound dollar exchange rate is 0.5 pct higher at 1.6237. The pound Australian dollar rate is 0.1 pct higher at 1.5325.

Sentiment has been boosted further following the Eurogroup press conference in Cyprus.

The key outcome to the meeting is that the European Stability Mechanism, the new permanent rescue fund for the eurozone, will come into operational on 8th October.

Klauis Regling, head of the temporary EFSF, told reporters that the ESM is already starting to pitch investors. This follows the German constitutional court's decision to reject a complaint against the ESM.

10:40: Sterling fights back against the euro.

GBP is looking good on the markets this morning. The one weak spot has however been that of the GBP/EUR exchange rate.

The euro is supreme across the board as the good news just keeps coming.

The result is the pound euro exchange rate has slipped below 1.25, but we should not write-off a return to these levels just yet advise Caxton FX.

Richard Driver at Caxton advises: "This pair has fallen well below the €1.25 level and is currently trading almost a cent lower. On balance, we believe this slump should be reversed wants the market euphoria wears off."

Jyske Markets also suggest the eu(ro)phobia could be due to run its course:

"The eu(ro)phoria may easily continue for the short term, but there are several dark (fundamental) clouds on the horizon. However, the tale risk has been reduced markedly by the ECB's initiatives, but there is still the implementation risk."

8:45 BST: Sterling continues bashing the dollar, euro bashes the sterling, Australian dollar bashes no one.

The pound sterling (Currency:GBP) is on the offensive against the US dollar (Currency:USD) once more this morning, continuing where it left off at last night's close. This is all tail-wind from yesterday's events.

The pound dollar exchange rate is 0.22 pct higher at 1.6192.

The pound euro exchange rate is 0.13 pct in the red at 1.2424. It's also all one-way traffic here - the euro is loving the current conditions; yesterday's Fed decision has only exacerbated the feel-good factor afforded by the ECB bond-buying initiative.

The pound Australian dollar rate is unchanged at 1.5313.

The Aussie should be doing better, but as overnight data shows, aggregate mining employment declined in the three months to August, with apparent weakness in coal mining, after a period of very strong growth.

Fears of an impending interest rate cut at the Reserve Bank of Australia are likely to cap the AUD's upside, as Sean Callow at Westpac says: " if AUD TWI keeps rallying without support from the terms of trade, an Oct RBA rate cut becomes more likely."