Currency Update – Tuesday 29th July

Currency Update – Tuesday 29th July

After the talk yesterday of a slow road to recovery for the US economy, the US encountered a obstacle to that with a renewed stock market weakness as the IMF painted a gloomy picture of the housing outlook stating that, for the time being,  the bottom is not visible. This, along with the small matter of large write downs by Merrill Lynch & their plans to raise $8.5 billion capital by selling new stock, put pressure on the Dollar overnight taking cable above 1.9950.

This morning we have had UK data out, which has put Sterling on the back foot as Mortgage approvals fell below consensus to record their lowest level since October 2000, also Mortgage Lending was lower than expected, all pointing towards further falls in house prices. With the consumer credit figures showing a weaker than expected rise, the current slow down in the UK economy keeps on going.

This has brought GBPUSD back below 1.995, further to the gains made last night.

Today seems to be relatively quiet in the markets, with no Eurozone data out to mull over, with GBPEUR staying range bound, as it has over recent weeks within the mid 1.26 level. We await Eurozone consumer confidence figures tomorrow to give us further direction.

Hazel Wilkinson | Treasury Solutions | nabCapital

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