US ($) Currency Thread 1 (closed - use thread 2)

inspector_monkfish

11:00 25Feb09 BOE SENTANCE: UK RETAIL SALES PLAYING A "STABILIZING ROLE"
11:00 25Feb09 BOE SENTANCE: UK RETAIL SALES MORE POSITIVE THAN EXPECTED
11:00 25Feb09 BOE SENTANCE: WEAKER GBP MAY BE HAVING LARGER IMPACT ON CPI
11:00 25Feb09 INTERVIEW:BOE Sentance:UK Retail Sales Play Stabilizing Role



LONDON --Consumer spending may be supporting demand to a larger
than expected degree in the U.K., while sterling's weakness may be having a
greater inflationary impact than anticipated, Bank of England Monetary Policy Committee member Andrew Sentance said.

The U.K. economy is in recession, having shrunk by 1.5% in the fourth quarter of last year, and 0.7% in the third. The nine-member MPC expects the contraction to continue this year, with the economy at its weakest around midyear and recovering thereafter.

However, retail sales in recent months have been significantly stronger than economists had expected. A survey by the Confederation of British Industry released Tuesday recorded an improvement in sales volumes at U.K. retailers, with the sales balance rising to -25 in February from -47 in January. "In general, consumer spending has played a stabilizing role in U.K. recessions," Sentance said in an interview with Dow Jones Newswires conducted Tuesday. "There are quite a few good reasons why we might expect that to be the case in the current environment."

Those reasons include the boost to real incomes from the fall in energy and other commodity prices, the impact of a cut in sales tax, and the reduction in mortgage interest payments as a result of the MPC's decision to slash its key interest rate by four percentage points since early October.

"There's been a slightly more positive tone than you might have expected looking at just crude measures of consumer confidence," Sentance said.
Sentance is one of the four MPC members who don't work for the BOE on a full-time basis. Before becoming a rate setter in October 2006, Sentance was chief economist for British Airways, and has also been head of economic policy at the Confederation of British Industry, the U.K.'s leading business lobby group.

Just as retail sales have been stronger than expected, the inflation rate has fallen more slowly than many had forecast.
Consumer price inflation eased only slightly to 3.0% in January, marking the third consecutive month that the outcome had been higher than economists expected, having peaked at 5.2% in September.
That compares with a significantly more rapid slowdown in price growth in
the 16 countries that share the euro, where the inflation rate fell to 1.1% in January from a peak of 4.0% in July.

Sentance saidthe slower fall in inflation may be because sterling's
depreciation is pushing up import prices, and those price increases are being passed on to consumers.
"There's some tentative evidence that we may be getting a bit more pass
through from the decline in sterling into inflation," Sentance said. The pound dropped around 26% against the dollar during 2008.

But Sentance said sterling's depreciation should help boost growth.
Initially, it should soften the blow of the global economic downturn by
allowing exporters, as well as suppliers to the domestic market, to keep up their margins, generating profits. Further out, when the world economy does turn around there should be a much more powerful boost to the manufacturing sector, he said.
"Obviously that's a bit further down the track, but it may be the confidence and the knowledge of that may also help companies to preserve capacity and to maintain investment in the current climate," Sentance said.

The BOE has long said it wants to see the U.K. economy rebalancing, to rely more on exports and less on domestic consumer demand. But in slashing its interest rate and mulling an increase in the money supply to stimulate domestic demand, the BOE may be standing in the way of that rebalancing.

But Sentance said that recessions were not always good times to resolve imbalances. "I think with these big imbalances we're talking about in the global economy, we have to recognize that adjustments will need to take place, not just in the current year or two, but over a longer period while the global economy is recovering," Sentance said.

neilbond007

ever get that sinking feeling?

poggs

neilbond007 wrote: »

ever get that sinking feeling?

erm. um. Its just profit taking surely? Isn't it? please tell me it is?

Wah!!!!!

(is it normal for the exchange rate to fall like a dart?)

inspector_monkfish

i'm truly baffled, sorry guys!!

numbers all good, certainly no worse than expected
good cooments from officials, and still its getting hammered, and not just against USD.

could be month end related, but who knows !!

inspector_monkfish

Wall Street Journal

12:15 25Feb09 Another reason for Gbp selloff, WSJ UK bank article

12:14 GMT - A few players linking the continued [GBP SELLOF] to an article in the [WSJ] titled UK bank plan needs clarity. The UK govt is running out of
time to put an end to the UK banking crisis, the piece says, and Thur's Treasury announcement of the details of the Asset Protection Scheme is not expected to convince the market given the likely lack of clarity on the banks' future capital positions. If the WSJ piece has proved a weight it
is not the only Gbp one today, i.e. a soft UK Q4 GDP report and BOE
Sentance admitting there is a possibility of further rate cuts despite
just 1.00% rates at present. Low so far is 1.4363. Expect more stops
through 1.4305/50 and the 200-hour and fibo area.

M4RKM

what's it at now?

did i buy me $$ on the right day?? yay me if i did...

M

inspector_monkfish

currently trading around 1.4385

M4RKM

inspector_monkfish wrote: »

currently trading around 1.4385

ouch! that is a lot less, that'll make a tourist rate around $1.365

inspector_monkfish

markymoo wrote: »

ouch! that is a lot less, that'll make a tourist rate around $1.365

what level did you deal at?

inspector_monkfish

ssshhhh.....don't tell anyone, but its slowly creeping back up..... trading 1.4420.....;)