Pound finishes up over 1.5% against the euro

The pound strengthened markedly against the euro yesterday, rising by 1.82 cents (1.59%) to finish the day at 1.1612.

• In early trading yesterday, the pound strengthened against the euro as strong equity market performance buoyed investor confidence that the UK’s recession may be bottoming out. London’s FTSE 100 was up 1.5% mid-morning.
  
• The pound also strengthened on the back of improved UK housing data released by property company Hometrack. It revealed that for the first time in 20 months there has been no month-on-month decline. However, house prices are still 9.6% down on a year ago.
  
• The UK currency also gained on the news that the recession-battered manufacturing industry may be ‘close to turning a corner’ according to a survey released by The Chartered Institute of Purchasing and Supply. It showed that activity last month was at its highest level in a year, as it posted a reading of 45.4 in May, still below the neutral mark of 50 but an improvement on the revised 43.1 recorded in April.
  
• Strength on London equities continued to drive sterling higher yesterday afternoon. The FTSE 100 eventually finished the day up 88.25 points.
  
• In trading so far today, the pound has pared some of the gains it made yesterday as investors start to focus on Thursday’s interest rate decisions.
  
• There are no major announcements due in the UK or eurozone today.