Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Overview

There was more woe for the pound during Tuesday’s session after a RICS report showed house prices deteriorated to a 30-year low last month, the worst reading since records began. Sterling was immediately sold off across the board, slumping to another series of lows against the other major currencies.

Elsewhere, the price of crude oil traded at another all-time high overnight at over $114pb, as concerns continue to mount over the size of global oil reserves. The steady increase in fuel prices is another major factor in recent price instability, and along with accelerating food prices, is a major threat to world economic growth. Today’s economic calendar promises to be a full one, with the US firmly in the spotlight with the release of core inflation and housing data as well as the publication of the Fed’s Beige book of US economic conditions.

GBP

The pound hit another record low versus the euro on Tuesday, after a fall in a key house price index to a 30-year low suggested that the downturn in Britain’s housing market is quickening. The Royal Institute of Chartered Surveyors said that its net balance of British house prices deteriorated to -78.5 in the three months to March from -65.7 in February.

Sterling was also stung by a fall in UK retails sales, which were significantly down in March, and also by the news that inflation in the UK may be coming under control. Analysts had been forecasting that recent interest cuts would have served to fuel inflation, but March’s CPI came in below forecasts at 0.4%, taking the annual rate of inflation down to 2.5% - potentially giving the MPC scope to cut rates again at the next meeting in May.

USD  

The US dollar made moderate gains across the board on Tuesday buoyed by a slew of positive data including robust manufacturing and inflation data, which has helped fuel speculation that the Fed may have come to the end of its rate-cutting cycle.  Producer Price inflation came in at  1.1% for the month of March, ahead of market expectations, and separate Treasury data showed that demand for dollar denominated assets remained strong, as the US attracted $72.5bn worth of inward investment.

The figure is particularly significant given that the US is currently operating a $57bn trade deficit that requires constant funding. Nevertheless, in spite of all this good news, it is significant that the greenback remained stuck within recent trading ranges, as investors continue to fret over the true state of the US economy. As a result, traders expect today’s release of housing and core inflation data to impact financial markets as the data will almost certainly determine the Fed’s next move.

EUR

The euro fell briefly yesterday against the US dollar after the German ZEW sentiment data unexpectedly declined in April. Weighing on investors’ minds was ever increasing price instability, which many of those questioned felt could derail the eurozone’s strong performance.

However the single currency layer recouped all of its losses as attention turned to the release of today’s final inflation figure which is likely to again come in way higher than the ECB’s 2% target. The implications for the eurozone’s monetary policy are clear; rates are set to either stay where they are or even rise as the ECB tries to get a lid on inflation.

JPY

Disclaimer: This Currency Market commentary is supplied by Travelex and is issued solely for informational purposes. Travelex and Atalink Ltd do not endorse or opine on the subject matter contained herein. Information is based on sources we believe are reliable but are not guaranteed by Travelex and Atalink Ltd as being accurate. Travelex and Atalink Ltd do not purport to offer a complete summary of the available data. Reproduction without written permission is prohibited. Copyright © 2005 Travelex Plc. All Rights Reserved.