Pound continues to gain ground over the euro

The pound edged up further against the euro on Friday, signaling two consecutive weeks of gains against the single currency. Investors have continued to react positively to the Bank of England’s decision on Thursday to cut their target interest rate to 1% - a new historic low. There is a belief that the Bank of England has been proactive in the past few months in attempting to rejuvenate the economy, whereas the European Central Bank may be slightly behind the curve. Interest rates were kept on hold at 2% in the eurozone, with many anticipating that these may have to fall much further to get their economies moving again.

There are no major economic announcements due in the UK today, whilst within the EU, Sentix release their investor confidence survey.

Pound strengthens against the US dollar

The pound strengthened against the dollar on Friday as the US announced the worst job losses data in 35 years. It is expected that this will renew the urgency for the US $900 billion stimulus package currently being considered by Congress. The pound also strengthened on the back of the Bank of England’s 50 basis points interest rate cut on Thursday. Analysts said while the US jobs data was bleak, the data was largely expected and focus quickly turned to how the data will help the stimulus plan get passed.

There are no significant announcements taking place in the US today.

Euro strengthens against the US dollar

The euro posted gains of 1.47 cents over the dollar on Friday to close the week up 1.91 cents at the 1.2938 level. The dollar was undermined on Friday after official US data showed that employers slashed 598,000 jobs in January, the steepest fall in 34 years. US unemployment now stands at 7.6% and many investors are hoping that Obama's fiscal stimulus package will be passed by Congress. However, the euro's gains were pared after figures showed that German industrial production had fallen by 4.6% in December.

In today's trading the dollar has strengthened back over the euro reaching as low as 1.2878 after it was confirmed that details of the proposed fiscal stimulus plan would be announced by the Treasury Secretary at 16.00 GMT tomorrow. It is anticipated that currencies would likely take their cue from how stock markets react to the plan. In today's trading there are no major economic announcements in the US, whilst in the eurozone it has been announced that the German trade balance surplus fell by €3.1 billion in December, to €6.9 billion.

Kiwi dollar strengthens against the pound

The New Zealand dollar gained over the weekend as gains in stock markets saw an improvement in appetite for riskier assets. Equity markets are still being used as the barometer for risk aversion, and optimism over a potential US stimulus package led to gains across most regional markets. The local market was closed on Friday due to a public holiday. Little domestic data is due until later in the week so the kiwi's direction is likely to follow broader market movements over the next couple of days.

Australian dollar strengthens against the pound

The Australian dollar made sharp gains against sterling late on Friday, after renewed optimism over a US stimulus package saw improved appetite for higher yielding currencies. Despite poor US jobs numbers, investors speculated that this could spur US lawmakers into deciding on the stimulus package more quickly. Wall Street rose on the back of this, dragging other major stock markets with it. Markets largely shrugged off further dismal economic data which showed sharp declines in both British manufacturing output and industrial production. This may indicate that markets are now satisfied that they have already priced in most of the bad news for the pound. Investors will today eye more forecasts for British growth; further readjustments downwards are likely.