IFX Market Report - 01 December 2009

Yesterday sterling fell to a one month low against the euro as consumer confidence figures in the UK came back lower than expected. The figures show that down on the high street, the UK consumer is still concerned about the state of the economy, particularly when it comes to personal finances. A monthly GfK NOP survey showed its UK consumer confidence index fell to -17 in November from -13 in October, below a forecast for -11 and marking the first fall since January.

This came after a slight rise in demand for the riskier currencies such as the pound against the safe haven currencies like the US dollar and Japanese yen as investors felt Dubai may have just managed to side step the worse of the potential problems it faced. It was widely reported at the end of last week that Dubai World asked for its debt repayments to be frozen whilst it re-evaluated its finances and looked for further funding, Abu Dhabi has indicated it may provide additional resources to keep Dubai running.  

By 2.45pm, the euro had strengthened by half a percent against the pound taking GBPEUR down to €1.0943, its lowest since late October.

Against the dollar, sterling remained unchanged on the day at $1.6477, falling back from the earlier high of $1.6593. The pound had fallen as low as $1.6252 on Friday, hitting its weakest in more than three weeks after Dubai's debt shock. The pound pulled back yesterday after it was unable to climb into the $1.66 region due to technical resistance, with the 21-day moving average hovering around $1.6610 and the 14-day moving average around $1.6625.

Additional data releases later in the day made little if any impact on sterling attractiveness. Data showed a small rise in UK house prices in November, with a rise of mortgage approvals in October. Other figures showed a fall in UK net consumer credit in October as consumers repaid the highest amount of unsecured credit on record last month.

Later on today we see the release of retail sales figures in Germany and Manufacturing PMI figures for Germany, the UK and Eurozone as a whole. US housing data in the afternoon finishes off the significant reports today. Tomorrow sees UK PMI construction data, whilst Thursday see a wide range of releases including Eurozone GDP, retail sales and interest rate decision meeting followed by Trichet’s speech, with various employment figures in the US.

At 9.15am this morning, the pound was slightly up over Asian trading at $1.6534, €1.0969, 12.12 ZAR, 143.719 JPY, 11.44 SEK and AU$1.7927. The euro maintained its position against the US dollar at $1.5071

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