Best Exchange Rates for Dollars and Euros

IMS FX MORNING REPORT for Tuesday 4th January 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5615
POUNDS TO EUROS 1.1653
POUNDS TO AUSTRALIAN DOLLARS 1.5467

EUROS TO US DOLLARS 1.3399
EUROS TO POUNDS 0.8581
EUROS TO AUSTRALIAN DOLLARS 1.3273

POUND HEADLINES:

• Sterling has been the worlds weakest currency in the last few weeks, and today's PMI offers an opportunity to recover. Although a rise is unlikely after the stronger number last month, and as expected above 57 would emphasise that UK manufacturing remains on track, though it is the service that is more of a concern.
• The top rate of VAT has risen from 17.5% to 20% as the government looks to boost tax revenues to cut the UK's debt levels. The government says the rise is necessary to help bring down the UK's high budget deficit. The VAT rise is also a worry for the bank of England. At 3.3%, the annual rise in the consumer prices index is already well above the Banks target of 2%, and the increased VAT rate is likely to push inflation towards 4% this year, analysts say.
• UK mortgage approvals for November has come in at 48.0k beating expectations of 46.5k

EURO HEADLINES:

• The Euro has managed to hold its ground against the USD in spite of weakness against the more solid currencies like the CHF, NOK and SEK in the last few weeks, and the message of support from China overnight may provide some cross support today.
• The eurozones manufacturing sector ended 2010 enjoying strong growth. The strongest growth was recorded in Germany, but Greece's manufacturing sector continued to shrink. Germany remained the star performer, seeing near record growth.
• Eurozone CPI estimate for December year-on-year comes in at 2.2% higher than the forecast of 2.0%

US DOLLAR HEADLINES:

• Another strong US ISM helped support the USD yesterday, and a weaker Australian PMI overnight also helped reduce appetite for carry positions. Tonight's FOMC minutes will be a focus, but it is unlikely the Fed has changed its tune much in a holiday shortened month.
• Sterlings broad bounce is helping it against the US dollar today with the price heading back over $1.55 having slid over a cent yesterday

If you need to buy, sell or make an international payment today then please
call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790