GBP Lower, CEBR Says UK Rates to Remain Low for Years

FX Highlights

• The USD, GBP and JPY trade lower to start the week with markets closed in Japan and trade thinned by holidays in the US and Canada, USD is pressured by improving risk appetite as equity markets continue to rally supported by earnings optimism and by concern about USD reserve status, Bloomberg news reports that 63% of new reserves were converted into EUR and JPY in Q2, GBP underperformed in reaction to report that Center for Economics and Business Research (CEBR) says that BOE interest rates could remain at current levels for five years and UK PM Brown warns about the risks to the UK economy of an early exit from quantitative ease, JPY pressured by improving risk appetite, commodity currencies rally supported by improving risk appetite and rising commodity prices
• No major US or Canadian economic data scheduled for release today
• The Financial Times reports that strong US economy needs a weaker USD, UK Telegraph reports that US policy of benign neglect for the USD is dangerous
• UK Sunday Times reports that UK interest rates may stay at 0.5% until 2011 and BOE quantitative ease will be expanded again, UK PM Brown said ending quantitative ease at this time would imperil the recovery, GBP lower
• German wholesale prices fall 0.2% in September, EUR trades higher supported by improving risk appetite as equity markets rise in Europe and the US and by gains in cross trade to GBP and JPY
• US equity markets set to open higher, European equities 1% higher, Nikkei closed for holiday

Upcoming Events

• US - Monday, no reports scheduled, Columbus holiday
• CAN - Monday, No major reports are scheduled for release

By Michael J. Malpede

Easy Forex

Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst.

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