Sterling continues to recover from recent lows versus the euro, aided by euro zone sovereign risk issues, as well as July’s UK industrial production report which showed reasonable growth. Versus the dollar, sterling recovered some of its losses yesterday before coming under fresh selling pressure late in the day. In a report released yesterday, the NIESR estimates that the UK economy grew by 0.7% in the three months to August, down from 1.3% in the three months to July. The Bank of England will be the focus of attention today as it makes its rate announcement at noon, though no policy changes are anticipated traders, Investors and analysts are worried that with the recent drop in GDP (NIESR Forecast) the BoE may look to re-introduce further quantitative easing with the view the UK could potentially fall back into a double dip recession.

Risk aversion looks to dominate again today, leaving the euro vulnerable. Comments from the ECB’s Stark overnight that German banks need more capital weighed on already shakey sentiment, with the euro also remaining under pressure versus virtually all of its counterparts. Looking across the board at the commodity sensitive currencies the Canadian Dollar saw positive movement overnight after the Bank of Canada decided to raise interest rates for a third consecutive month bringing the official Interest rate to 1%. Positive news out from Australia overnight also helped support AUD price movement after stronger than expected employment data was released, with the recent rally in the AUD following last weeks positive GDP figures the AUD continues to gain ground and currently provides a great opportunity for any Australian Dollar sellers.

With the main focus on today’s interest rate decision buyers into all the majors are advised to work “protective Stop” – this will minimise any potential losses particularly if the policy committee look to increase their quantitive easing measures. If this is the case it is widely expected the Pound will loose significant ground against all 16 of its counterparts so caution is advised for buyers around the date release.

If you would like to discuss your requirement or if you would like a live trading quotation against any of the 16 most actively traded currencies do not hesitate to give me a call.

Tom Trevorrow

Senior Trader

+44 1736 335264

tom.trevorrow@torfx.com