Pound strengthens against euro

In response to the Bank of England’s decision to cut interest rates by 0.5% to a new historic low of 1% yesterday, the pound has regained value against the single currency as markets reacted positively to the move. The European Central Bank also acted as expected and kept interest rates on hold at 2%. Housing numbers from the Halifax house price index also surprised to the upside earlier on Thursday, with a rise in prices of 1.9 percent in January, with many anticipating they would have fallen further. In early trading today the pound has risen further against the euro, hitting a 2 month high as investors hold on to the belief that the UK’s interest rates may be nearing the bottom, whereas the eurozone has much further to fall. It must be noted, however, that an underlying nervousness still remains over the state of the UK’s economy and how deep a recession we may be facing.

Germany release their industrial production figures this morning, whilst within the UK, industrial and manufacturing data is released.

Sterling strengthens against the US dollar

The pound strengthened against most of the major currencies yesterday following the Bank of England’s decision to cut interest rates by 50 basis points to 1%. Usually currency weakens on the back of interest rate cuts, however the opposite has occurred on this occasion as investors’ believe it points to a positive economic stimulus.

The pound reached a two-week high against the dollar, although experts believe this will be short lived with many predicting losses versus the greenback over the next few months. It hit a 23-year low just last month.

There are several significant announcements taking place in the US today including Nonfarm Payrolls, Average Hourly Earnings, Average Weekly Hours and Unemployment Rate at 13.30 GMT. In the UK, Industrial Production and Manufacturing Production data will be released at 09.30 GMT.

Dollar strengthens over the euro

The dollar strengthened over the euro by 0.59 cents yesterday to close the day at 1.2791, after rumors that the Securities and Exchange Commission is going to relax some accounting rules saw US stocks rally. This had the effect of improving risk appetite in the foreign exchange markets and saw the euro come off its earlier low of 1.2765, which it had been pushed to after lingering pressure from the downgrading of Russia's sovereign debt.

In today's trading there has been little change as investors wait for the announcement of a barrage of important US employment data. Announced at 13.30 GMT, Average Hourly Earnings, Non-farm Payrolls and Unemployment Rate figures will give a clear indication of the health of the US employment market and some investors speculate that we will notice a slowing in the rate of contraction. In the eurozone German Industrial Production data is announced this morning.

Australian dollar eases off slightly against sterling

The Australian dollar eased off slightly against sterling yesterday, as the BoE cut rates by 50 basis points, to a record low of 1 percent. The decision generally met market expectations but investors continue to remain nervous over the economy and the state of its financial system. Analysts are now pricing in a further rate cut from the BoE in March. However monetary easing, as a tool to stimulate the economy, will have less effect the closer rates head toward zero. Investors therefore continue to remain alert to possible alternative measures being used such as quantitative easing. This would involve flooding the banking system with money to keep official rates low and help shore up the financial systems.

New Zealand dollar remains range-bound

The New Zealand dollar remained largely range bound yesterday, gaining some support from jobs data. The jobless rate rose to 4.6 percent in the fourth quarter, however 21,000 jobs were added in the same period. The numbers backed a case for the central bank to cut rates by smaller increments rather than larger ones. The kiwi was also aided by an improvement in investor risk appetite.