Sterling regained further ground against the single currency yesterday, following improved risk appetite in markets. This has come following the announcement in the US that they are set to adopt a $1 trillion plan to free banks of toxic assets – investors reacted with enthusiasm to the plan as equity markets around the world rose, with the FTSE 100 up by 2.9%. In early trading today the pound is continuing to rally, as risk appetite remains following a rally on Asian stock markets overnight.
Investors will take note of the UK’s February inflation data today, with the Consumer Price Index expected to fall further towards the Bank of England’s 2% target. The Retail Price Index is expected to turn negative for the first time in nearly 50 years, with the Consumer Price Index expected to follow in the summer as the UK flirts with a period of deflation.
The eurozone releases their PMI manufacturing and services data this morning, but expect GBP / EUR to take direction off equity markets today.
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