Positive news for the housing market

U.K. consumer confidence rose to the highest in 21 months in October as Britons said they are more likely to make big purchases, GfK NOP said. An index of sentiment rose to minus 13, the highest since January 2008, from minus 15 the previous month, the market researcher said. Rising consumer confidence will help pull the U.K. out of the worst recession since World War II after the economy unexpectedly contracted in the third quarter and may lead to early support for the pound.

Also this morning we had Nationwide UK house prices. Prices were higher year-on-year in October - the first annual rise for 19 months, the Nationwide said. Property prices were 2% higher in October than in the same month the previous year, with the average home costing £162,038. But the pace of monthly price rises has eased - going up by 0.4% - and the building society said that values could plateau in the autumn months possibly putting pressure on sterling.

Elsewhere the Bank of Japan kept interest rates on hold, as expected at 0.1%

Best exchange rates of the week

The announcement this morning that the EU has approved plans for the nationalised bank Northern Rock to be split in two, with the "good bank", consisting of savers money, available to be sold, seems to have spurred Sterling towards recent highs against virtually all currencies today.

The revenue generated by the sale of the good bank, which could be completed prior to next years general election, would be returned to the taxpayer.

Among those named as potential buyers are Virgin and the National Australia Bank.

I think the positive exchange rate movement is as a result of the revenue generated going someway to reducing the huge overdraft UK plc currently finds itself with, however critics fear that the taxpayer will be left with losses, racked up from the bad assets that remain with the bad bank.

It will be interesting to see how this matter unfolds over the next few weeks and months and whether long term this is seen as positive or negative news for the Pound.

Clocks going forward, bad for business??

Research by the Daily Telegraph this week, indicates that this is expected to be the most unproductive week of the year with worker's enthusiasm being hit by the darker evenings resulting from the clock's going back??

What are your thought about this twice yearly phenomenon?

It's all to do with saving the hours of daylight, and was started by a chap called William Willett, a London builder, who lived in Petts Wood in Kent.

Basically, he reckoned that you could improve the population's health and happiness by putting forward the clocks by twenty minutes every Sunday in April and do the opposite in September.

His idea was not taken up, even though a 'Daylight Saving Bill' was introduced some five years before the outbreak of World War One. But once the war started, it was considered prudent to economise, to promote greater efficiency in using daylight hours, and in the use of artificial lighting. And so in 1916, 'Daylight Saving Time' was introduced.

Even though most countries abandoned this after that war, some eventually decided that it was a good idea, and most of these nations began to keep it throughout the year.

Since 1972, Britain has decided to go with Greenwich Mean Time in winter, and British Summer Time in Summer. But back in 1968, Britain tried a four-year experiment by advancing time one hour ahead of GMT throughout the year.

But those living further north, particularly in Scotland, found it most unsatisfactory, with dark mornings for much of the year, and the experiment was dropped.

But the arguments rage on....and on and I'd really like to know your thoughts??

Sterling exchange rates

On Friday UK GDP data (a measure of the total goods and services produced in the UK) released on Friday. The expectation prior to the release was for a modest rise and technically bring the UK out of recession. However, as may come as no surprise to many of you, the UK economy actually contracted in the last quarter, and confirmed the UK is still mired in recession- the longest since records began.

This announcement may also lead to further quantitative easing measures being put in place by the Bank of England after their next meeting in early November.

The Prime Minister Gordon Brown has promised the UK economy will return to growth by 2010, stating "my pledge to you is to make reform of the financial sector a reality and to see Britain's economy return to growth by the turn of the year". The data will have been as much of a blow to Brown's re-election as it was to the value of the Pound with big drops against the Dollar, Euro, and a host of other currencies.

Exchange rates still rising on the back of Bank minutes

Sterling had a great day yesterday with exchange rates going up against virtually all other currencies, at one point trading 1.8% up against the US Dollar and 1.1% up against the Euro.

The main driver behind this strength was the release of the Bank of England minutes from their meeting earlier this month which told us that there was a unanimous decision agreeing to keep interest rates on hold at 0.5% and that currently we did not need to extend the quantitative easing measures currently standing at £175bn.

I think we shall continue to see Sterling in a buoyant mood during today's trading as the impact of the minutes continue to filter through the market.

For those of you interested in currencies across the pond keep an eye out for US jobless claim numbers at 1.30pm and 3.30pm and Canadian retail sales data out at a similar time.

Canadian Dollar Exchange Rates

The Canadian interest rate decision came out unchanged as expected and stayed at 0.25%, however as regular readers will soon become aware it is the accompanying information that is heavily watched by investors.

In the announcement that followed it was suggested that the Bank of Canada would extend its low-rate strategy by a further 3 months. This dramatically weakened the Canadian dollar and the pound strengthened by over 2% in response.

This trend has continued throughout tradin today with "the loonie" currently trading above 1.72.

British debt out of control?

In his speech yesterday Mervyn King spoke in detail about the amount of financial support that has been given to the UK economy. Including guarantees it stands at a staggering £1,000,000,000,000, 1 trillion pounds or two thirds of the UK's total annual output.

He stated that "we shall be paying for the impact of this crisis on public finances for a generation" and later said that "never has so much been offered by so few to so many."

The only way I can see this being repaid is by very agressive spending cuts and increases in tax. This could be further bad news for the UK economy as companies, investors and top earners look to base themselves elsewhere.

This in turn could be bad news for Sterling as the flow of money out of the Pound into other currencies should lead to Sterling weakness and lower exchange rates.

For a more detailed look at todays market movers take a look at FCD's market report here written by one of our senior dealers Stephen Eakins.

Exchange rates continue to rise

Another good day for the Pound as Sterling makes gains over all the major currencies:

GBPEUR +0.32%
GBPUSD +0.11%
GBPAUD +0.75%
GBPNZD +1.28%
GBPCAD +2.01%
GBPJPY +0.42%

With the Bank of England minutes being released tomorrow with news of the interest rate vote and the success (or not) of the recent quantitative easing measures sure to be highlighted, tomorrow morning could be quite a rollercoaster.

In other news, the dollar fell to a fresh 14-month low against the euro today, flirting with the $1.50 level against the single currency for the first time since August 2008.

Sterling Dollar hits 4 week high

In the run up to the release of the Bank of England's MPC (Monetary Policy Committee) minutes from their meeting earlier in the month tomorrow Sterling seems to be performing well.

US Dollar exchange rates rose over 0.25% to a 4 week high with interbank levels approaching 1.6450.

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Welcome

Hi and welcome to the newest most up-to-date blog from the world of foreign exchange. Here you will find daily information regarding Sterling exchange rates against all the major currencies including the Euro and US Dollar.

If you have any comments or would like me to write about anything specific please don't hesitate to email me directly at sah@currencies.co.uk or if you have any foreign exchange requirements call me on 01494 787457 where myslef or one of Foreign Currency Direct's experienced brokers will be on hand to guide you through one of the worlds most volatile markets.