Forex - Pound remains under pressure after shock Northern Rock news |
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Fri, 14 Sep 2007 09:58
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LONDON (Thomson Financial) - The pound came under further pressure after news that UK mortgage lender Northern Rock has had to seek emergency funding from the Bank of England, while the dollar remained weak as markets awaited the release of key US retail sales data this afternoon.The pound fell to new nine month lows against the euro after the Northern Rock news highlighted the ongoing crisis in UK money markets.'The pound has come under added pressure in overnight trade after news that Northern Rock had sought help from the Bank of England to help it cope with the ongoing credit squeeze,' said James Hughes, market analyst at CMC Markets.Analysts noted, however, that sterling's losses have not reached panic levels.'The reaction does however seem to be something of a knee-jerk one as these emergency credit lines have been tapped by other institutions in recent weeks anyway and cable at least has levelled off for the time being,' Hughes said.Neil Mellor at the Bank of New York Mellon said the market's focus will not be on concerns over the potential fate of Northern Rock, but on whether the credit crisis is set to deepen further for already troubled UK financial companies.'Whether the news of Northern Rock's woes constitutes a final exclamation mark in the whole credit debacle or is the beginning of a more serious phase of problems for the sector is ... a question that we imagine will be most troubling investors as stock trading in the UK gets underway this morning,' he said.Elsewhere, the euro was pressured by sterling's losses against the dollar but still held up well, remaining just below the 1.39 usd mark after hitting a record high yesterday of 1.3927 usd.Focus today will centre on the release of key US retail sales data, which should give some indication of the depth of the slowdown in the US after the very poor jobs data earlier this month.Beyond that, however, trade is likely to remain volatile as speculation continues to grow as to whether the Federal Reserve will step in next week and cut interest rates, CMC's Hughes said.Elsewhere, the yen recovered somewhat from earlier falls on the back of ongoing political uncertainty following the resignation of Japanese Prime Minister Shinzo Abe on Wednesday and amid talk that the Bank of Japan will not raise interest rates again any time soon.London 0828 GMT Sydney 11.40 am (0140 GMT)US dollar115.05 down from 115.47sfr 1.1855 up from 1.1854Euro1.3882 up from 1.38800.6881 up from 0.6871yen 159.70 down from 159.80sfr 1.6460 up from 1.644Sterlingusd 2.0170 down from 2.0198yen 232.00 up from 231.89sfr 2.3917 down from 2.4156Australian dollarusd 0.8412 down from 0.8460stg 0.4169 up from 0.4161yen 96.78 down from 96.830New Zealand dollarusd 0.7146 up from 0.7145jessica.mortimer@thomson.comjkm/jlwCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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Forex - US dollar mixed in Sydney morning trade ahead of FOMC meeting 