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Pound slips on Bank of England comments while retail sales fell 1.4% last month

23rd May 2013
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FX Market Overview

 

The grotesqueness of the actions of those two Neanderthals who butchered an off duty soldier yesterday is only matched by the obscenity of their pathetic delusional attempts to claim some kind of political morality for their barbarism. There is no excuse and can be no excuse for their actions. Thankfully, their depravity will do nothing but add to the resolve of the Great British public. It is a relief to know that few of us can even start to imagine what goes through the minds of people like that. Long may that be the case.

Away from the carnage in Woolwich, the market was a relative sea of tranquillity. The Pound was still reeling from the previous day’s poor data and the hints of further quantitative easing when it was revealed that retail sales fell 1.4% last month and the Bank of England minutes hit the news wires. The Monetary Policy Committee voted unanimously to keep the base rate on hold at 0.5% but the vote was split 6-3 on whether to add further funds to the QE budget. That caused a significant fall in the value of the Pound but Sterling rebounded a little before the end of the day and remains above $1.50 and €1.17.

The Pound slipped again but rebounded after Federal Reserve Chairman Ben Bernanke suggested the Fed might start to taper off their bond buying program; a massive program of monetary expansion, over the next few meetings. The US Dollar is stronger across the board today ahead of the weekly jobless claims. In fact the USD is at a 4 ½ year high against the Japanese Yen; a currency weakened by the Japanese government as a by-product of their inflationary strategy.

The Swiss National Bank took the opportunity in the wake of the Fed testimony to suggest they are quite open to using negative interest rates in order to weaken the hugely overvalued Swiss Franc. They appear not to be bothered about being branded as currency manipulators; a charge that every other central bank and government seems to want to avoid.

Today’s big data from the UK perspective is the 2nd estimate of Q1 economic growth. The first estimates gave us a 0.3% growth figure. An improvement on that will boost sterling significantly but anything less than that provisional number will be very negative indeed after the last few days of poor results.

The other big news is all European in flavour; a speech by the head of the European Central Bank and both manufacturing and consumer confidence indicators will all be watched very closely.

On a lighter note, I have decided I want to grow up to be one of these guys. 80 year old Yuichiro Miura climbed Everest for the third time this week. His last two ascents were at the ages of 70 and 75. And Doris Long, a great-great grandmother has abseiled down 110ft Mercantile House in Portsmouth University to celebrate her 99th birthday. My kind of people.

Some interesting judgement calls from history

You're planning to make a ship sail against wind and tide by lighting a fire below deck?? I don't have time to listen to that kind of nonsense!"
Napoleon Bonapart, about Robert Fultons plans to make a Steamboat.

Airplanes are interesting toys but of no military value.
Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.

We don't like their sound. Groups of guitars are on the way out. 
Decca Records Rejecting the Beatles, in 1962

Who the hell wants to hear actors talk?
H. M. Warner, founder of Warner Brothers film studios, 1927

I think there is a world market for maybe five computers. 
Thomas Watson, Chairman of IBM, 1943

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Published by David Johnson, Director, Halo Financial - Specialist Currency Services

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