Monday, 6 Sep 2010

British Pound Falls To Six-Week Low versus the Euro

The British pound fell to a six-week low against the euro today, as the EUR/GBP pair gained about 60 pips and peaked at the 0.8388 level. The pound lost about 100 pips against the U.S. dollar as well.

Very low volatility was observed in the market today due to the U.S. Labor Day. Most of the major currencies saw very peaceful trading against their major counterparts. The pound depreciation seems to be the result of heavy selling by a U.K. clearing bank. It also looks to be a correction to the dollar's free-fall on Friday, which took place following the better-then-expected Non-Farm Payrolls report.

Looking ahead to tomorrow, the most significant economic publication looks to be the German Factory Orders. This report measures the change in the total value of new purchase orders placed with manufacturers. Analysts are forecasting that the German Factory Orders rose by 0.6% in July. Such a result is likely to support the euro against its major rivals.