Sterling slips up in September. Optimistic October?
Sterling struggled at the end of September falling to its lowest price against the Dollar since the end of May. The Governor of the Bank of England's comments that a weaker Pound would help rebalance the U.K economy was like an early Christmas present for U.K exporters......and an open invitation to traders to sell Sterling.The U.S economy shows signs of stabilization but Friday's non farm payroll figures showed that the spectre of high unemployment will remain well into 2010. U.S. job losses last month reached 263k, far above expectations, with the unemployment rate rising to 9.8 percent.Septembers MPC meeting kept U.K interest rates on hold but more importantly decided not add to the 175 Billion set aside for Quantative easing. This gave the Pound a short term boost to its month high of 1.67.Where does this leave the Pound in October? The recent sell-off in the stock markets shows a return to a risk averse mentality, a market trend that favors the Dollar strengthening. The U.S economies continuing struggle to emerge from recession will help the Dollar in the short term. Sterling must break above 1.60 otherwise its downward trend may continue.EUR/USDPresident of the ECB Jean-Claude Trichet echoed Mervyn King's comments in Championing a stronger Dollar. The Euro has gained over 15% since February and hit a 12 month high in September of 1.48. Expect the Euro to trade around its current levels in October as it still benefits from a higher interest yield and the Euro zones comparatively better GDP than the U.S.CAD/USDThe Loonie fluctuated aggressively throughout the month. Mixed news from the Canadian economy, with improved manufacturing data being offset by negative retail sales figures made for an interesting month. With the U.S as its biggest trading partner no Canadian government will want the Loonie to trade too high against the Dollar.Let us help your clients get the best possible rate. It pays to use the experts.Sincerely, Laura McLoughlinRegional Manager MoneyCorp