British Pound Sterling: Currency in strong gains vs US dollar, euro and Australian dollar as GBP defiantly shrugs off Fitch warning
Last Updated on Friday, 16 March 2012 15:01 Written by Will Peters Friday, 16 March 2012 14:59
The pound (Currency:GBP) has outperformed other major peers in the currency market space today.
At 15:00 GMT we see the pound euro exchange rate is 0.11 pct up on the day at 1.2023, the pound dollar exchange rate is 0.86 pct up at 1.5848 and the pound Australian dollar exchange rate is 0.33 pct up at 1.4978.
It appears that the pound sterling has defiantly shrugged off the shift to a negative outlook from Fitch.
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Analysts do however remain concerned that the warning highlights the vulnerability of the UK’s economic backdrop to further shocks.
"Next week will be important for the fundamental outlook of the UK, including the release of CPI, BoE minutes and retail sales. We continue to expect the currency to perform well this year, as its Triple A and low beta status prove attractive to investors," says an exchange rate note from Scotia Bank.
UniCredit warn that there is the possibility that more pound dollar exchange rate weakness lies ahead due to a poor UK economic outlook in comparison to an early bottom-building in the US say UniCredit.
But, the same exchange rate note in which the call is made also warns that the US dollar is expected to lose strength in the coming week:
"US dollar strength has been the prevailing issue on FX markets since the beginning of March. It all started when the Fed's Bernanke refrained from any hints regarding possible QE3 in his Humphrey Hawkins testimony and continued last Friday with surprisingly strong NFP data (incl. upward revision for January) and was further supported by recent US retail sales and a slightly more upbeat FOMC statement.
"However, we do not expect the US dollar to receive ongoing fundamental support, given four important housing data releases that are impending and taking into account that the Fed anticipates the housing sector to remain depressed."
- Sterling set to recapture lost ground vs euro
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- S&P Raises Greece’s Credit Rating, ECB To Accept Greek Debt As Collateral
- Euro consolidates as market volumes thin out
- Euro pound FX direction continues to be driven by technical considerations
- Spanish borrowing in 2013 expected to be raised higher
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