The Pound Sterling Live

16:07: Forecasts from UniCredit Bank are not pro-GBP

UniCredit Bank are certainly not on the side of sterling warning that there are some significant declines ahead. We have covered the issue in two articles:

GBP/EUR forecast note

EUR/USD forecast note

14:51: Rate update

GBP/EUR is 0.67 pct down at 1.1664.
GBP/USD is 0.34 pct down at 1.5103.
GBP/AUD is 0.02 pct higher at 1.5462.

NB: These are inter-bank market quotes, your bank will affix their own discretionary spread when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please see more here.

12:00: Beware a spike in GBP

Stephen Gallo at BMO Capital Markets warns that it is not necessarily all downhill from here for sterling:

"On the basis of some metrics, the GBP is in our opinion looking more vulnerable to upward spikes, particularly in relative value terms, on the basis of much better-than-expected domestic economic data releases.  

"Over the course of the last few years, there appears to have been a notable tendency for the rolling correlation between weekly changes in GBP/USD and the UK’s Economic Surprise Index to rise as net positioning in the GBP has adjusted upwards, but not necessarily the other way around."

10:25: Latest exchange rates

The pound US dollar exchange rate is 0.45 pct in the red at 1.5086.

The pound euro exchange rate is 0.64 pct lower at 1.1669.

The pound has also given up early gains against the Australian dollar; the rate is now flat at 1.5464.

 

10:10: Carney lays down his 'fix-it' credentials

In his last speech as Governor of the Bank of Canada Mark Carney has made it clear that he will not stand by and watch Britain slip into a lost decade.

Worryingly for sterling bulls he has indicated he rather admires the aggressive stance taken by the Bank of Japan to deal with that country's lost decade. Look at what the BoJ's action has subsequently done to the Yen!

Carney says:

"Europe can draw lessons from Japan on the dangers of half measures, Europe remains in recession. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens."

Of the G7 nations, which includes Britain, he argued that only "Canada does not need to repair."

Canada's success, he said, was down to "responsible fiscal policy, sound monetary policy, a resilient financial system."

10:00: UK retail sales fall

Bad news for sterling as UK retail sales unexpectedly fell in April, led by the biggest drop in food sales for almost two years and indicating continued weakness in consumer spending

Sales including fuel declined 1.3 percent from March, when they fell 0.6 percent, the Office for National Statistics said today in London.

The median forecast of 25 economists in a Bloomberg News survey was for a 0.1 percent increase. Food sales plunged 4.1 percent, the most since May 2011.

8:55: Latest pound exchange rates

The British pound sterling (Currency:GBP) is down against the Euro and US dollar, but is seeing some luck against the Australian dollar thanks to some poor data out of Aus today.

The pound to euro exchange rate is 0.32 pct down at 1.1704.
The pound to Australian dollar exchange rate is 0.2 pct higher at 1.5493.
The pound to US dollar rate is 0.05 pct lower at 1.5146.
The pound to New Zealand dollar exchange rate is 0.18 pct in the blue at 1.8593.

8:45: MPC minutes ahead… any significant impact?

We note that the main event for GBP today is the release of May's Bank of England MPC minutes - i.e an insight into how the committee is thinking when it comes to changing interest rates and printing money.

We doubt that this will have a material impact on sterling following yesterday's fresh declines.

Lloyds Bank Research say:

"Today’s MPC minutes will probably show another 6-3 vote in favour of no change in policy, but after the somewhat better UK growth data in the past few weeks, the risks are towards fewer votes in favour of QE."

8:40: Yesterday was a tough one for sterling, but Lloyds are positive

Lloyds Bank Research say we shouldn't write off the pound just yet:

"Yesterday’s weaker CPI data underlined that inflation risks are also declining, but much of this is due to weaker oil prices rather than weaker domestic inflation pressure, and with inflation still well above target this is unlikely to encourage any MPC hawks towards the dovish side.

"GBP fell back yesterday on the weaker numbers, but GBP/USD in the low 1.51s looks good value, and with risks towards less pressure for UK easing and potential for Bernanke to squash hopes of tapering, this should be a buying opportunity for the pound. Retail sales will also be a focus, but look likely to be close to expectations."