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Consumer confidence declines in the UK as Xmas gets closer

Wed, Dec 3 2008, 10:55 GMT
by Benny Menashe

Finotec Group Inc.

U.K. consumer confidence deteriorated in November as unemployment jumped and banks curtailed credit, Nationwide Building Society said. An index of sentiment fell 6 points to 50, the lowest since the survey began in May 2004, Britain’s second-biggest mortgage lender said in a statement today. The reading, taken from a survey of 1,000 people from Oct. 20 to Nov. 16, compares with 83 a year earlier. Pessimism increased “against the backdrop of an emerging recession in the U.K. and continued global economic uncertainty,” Fionnuala Earley, chief economist at Nationwide, said in the statement. “It remains to be seen whether the Chancellor’s recent announcement will greatly improve consumer confidence.” The GBP/USD is currently trading at $1.4782 as of 8:35am, GMT.

The euro traded low against the dollar before a report today that may show euro-area retail sales fell, boosting speculation the European Central Bank will cut interest rates tomorrow. “The bias is for the euro and the pound to go lower,” said Motonari Ogawa, director of currency trading in Tokyo at Barclays Capital Inc. “We’re talking about cuts of as much as 1 percentage point, if not more. The poor economic outlook is a negative factor.” The EUR/USD is currently trading at $1.2638 as of 8:58am, GMT.

Bank of America Corp. raised its forecast for the yen against the dollar on signs that the Bank of Japan is not in a hurry to lower interest rates to counter the nation’s recession. The yen is likely to trade at 96 by the end of March, compared with a previous prediction of 100, said Tomoko Fujii, Bank of America’s head of economics and strategy for Japan. BOJ Governor Masaaki Shirakawa said yesterday that cutting the benchmark interest rate from 0.3 percent could impede the function of the money market. “Slower policy easing steps by the BOJ compared to many other central banks will probably keep the yen firm in the next few months,” said Tokyo-based Fujii, confirming a research note published yesterday. The USD/JPY is currently trading at 92.86 as of 9:05am, GMT.

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Published on  Wed, Dec 3 2008, 12:57 GMT