UK MARKET
After a steady climb following the US Presidents speech on banking reform, heading
into the London trading day, Sterling reversed course and once again began
to drop. There was really nothing too bad as far as economic data to
precipitate this drop. UK Retail Sales did miss expectations by showing only a
0.3% growth figure; however, this was much better than the decline of 0.3%
posted the month prior. All in all, it looks like concern, confusion, fear,
apprehension (go ahead and pick any or all of the above terms) are what is
really driving the markets.
EU MARKET
The last few hours of trading have seen the Euro cede
back some of the ground gained yesterday after US President Obama unveiled plans
to return to regulation that could go as far as breaking up some of the
nation’s largest financial institutions. After hitting an intraday high around
1.4165 though, the Euro has once again felt some selling pressure even as the
Eurozone posted some positive economic results. Even so, this news was not
enough to keep the EUR moving
and from the price action it appears that traders are
still not willing to stick with a belief in Euro strength past the short term.
This week investors and traders will continue to monitor any developments out
of Greece, as well as any
additional talk from the US
administration regarding bank limitations on size and trading activity.
US MARKET
The U.S. dollar (USD) gave up some ground after
President Obama made his speech outlining his proposed changes to bank
regulations and bank reform. However, even though the USD was falling, the
GBP/USD continued to fall as well. This is an indication that the pullback on
the USD is only temporary. If this is correct, watch for the EUR/USD to
continue to fall---even though is has found some temporary support at the 38.2%
Fibonacci retracement level.
OVERVIEW
All in all Sterling
took a hit against the board of currencies on Friday due to retail sales only
rising by 0.3% between November and December. Across the pond there is decline
in risk due to President Obama’s proposal to reshape the regulations in the
banking sector. There is also unease over the re-appoint Ben Bernake as
Chairman of the Federal Reserve for a second term, although the general
consensus is he will be re-appointed.
Main events in the UK are tomorrow’s first release of
the Q4 GDP numbers, general consensus is growth of 0.4%, which will mean we are
finally out of recession.
At 09.15am this morning the market were at GBP/USD
$1.6164, GBP/EUR €1.1423, and EUR/USD $1.4148.
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