On Thursday the pound weakened against the US dollar by 0.37 cents to close at 1.4679, despite news that Britain’s goods trade balance improved to -£7.3 billion and the Bank of England kept interest rates at 0.5%. Comments from the Monetary Policy Committee confirmed that whilst rates would be kept on hold the BoE would continue with its quantitative easing programme. In the US, the number of newly unemployed Americans applying for benefits fell to 654,000, but the number of continuing unemployed on benefits rose to 5.84 million. It was also reported that American import prices fell by 0.5% in March and now stand 14.9% down on the year, while the US trade balance shrank to -$25.97 billion.
Over the holiday weekend the pound performed well over the US dollar, strengthening from 1.4679 on Friday to 1.4851 at Monday’s close, on improved sentiment. A five week rally on Wall Street and growing confidence that the financial sector might be passed the worst saw safe haven demand for the dollar fall and appetite for the risky pound improve. Goldman Sachs led the US banks in announcing their 1st quarter earnings, with surprisingly strong figures much to the delight of investors.
In today’s trading the pound has pared some earlier gains and the market is floating around Monday’s close. This is ahead of the announcement of US producer price index, retail sales (excluding autos) and business inventories data, as well as a speech by the Fed’s Stern and figures from the ABC/Washington Post consumer confidence survey. There are no major economic announcements in the UK today.
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