Pound performs generally well

In the afternoon's trading the pound has given up most of it's earlier gains against the euro as the single currency has responded well to rising stock prices. However the same rising stocks have seen the pound perform well against many currencies, including the dollar dollar and yen. The FTSE 100 currently sits 2.11% up on the day.

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Eurozone data

The following data has just been announced in the eurozone:

Consumer Price Index: +0.4% in Februrary 2009
Consumer Price Index: +1.2% in Februrary 2009 (year on year)

Employment Change: -0.3% in Q4 2009
Employment Change: 0.0% in 2009

This data shows that unemployment did start to increase in the last 3 months of 2009 and that inflationary pressures persist in the eurozone. The pound currently sits 0.8 cents up over the euro on the day at the 1.0908 level.

Improved sentiment sees pound gain over euro

The pound enjoyed a positive finish to the end of last week as brighter investor sentiment boosted riskier assets. Sterling’s gains were capped somewhat as the single currency was still benefiting from the Swiss central bank’s decision on Thursday to weaken their currency, with investors buying into the euro. The pound benefited from some confidence returning to the market as there was the belief that large US banks may be able to survive without nationalisation. Nonetheless, the economic picture in the UK remains poor with unemployment set to surge over the two million level this week, with official figures expected to confirm that unemployment has risen by almost 176,000 in the three months to January.

There are no major announcements due in the UK today, whilst within the eurozone, investors will be particularly interested in the consumer price index figures being released, giving an indication of inflation, and the employment change data due this morning.

Sterling pushes higher against dollar

The pound gained ground against the dollar on Friday, and has continued to strengthen to a 1-week high this morning, as investors bought back the riskier currency following the broad sell-off of sterling last week.

Sterling had been sold off last week amid concerns over the health of the British banking industry and skepticism about the BoE's quantitative easing program. However, the pound shrugged off these concerns on Friday and strengthened against most major currencies as equity markets in the UK were dragged higher by gains in Asia and Europe.

There are no significant releases due from the UK today, while a raft of data is due from the US – Empire Manufacturing, Long-Term TIC Flows, NAHB Housing Market Index and Industrial Production figures are all released in the States this afternoon.

Euro performs well against US dollar

On Friday the euro strengthened by 0.18 cents against the dollar to close the day's trading at the 1.2926 level in what was a volatile day's trading. During the day the dollar had swung between gains and losses following performance on equity markets, but it closed down as stocks posted weekly gains and improved risk appetite saw the dollar's safe haven appeal eroded. During the session it had been announced that the rate at which eurozone retail sales were falling had decreased, -2.2% in the year to January as opposed to -2.4% in December. In the US, the rate at which import prices was falling also slowed, the trade balance was shown to have shrunk from $39.90 billion to $36.03 billion and the Reuters/Michigan Consumer Sentiment Index showed improvement. All these announcements had the effect of improving sentiment amongst investors and as risk appetite increased, the euro became a more attractive opportunity.

In today’s trading the euro has strengthened against the dollar with investors expecting that the US government will announce initiatives to buy long term Treasuries to help keep interest rates down. In the coming week the US Treasury will share more information on how bad assets will be taken off banks’ books with public-private partnerships. Later today the EU will release the Consumer Price Index to measure inflation and purchasing tendencies, as well as employment change data. In the US, industrial production, the New York State Empire State Manufacturing Index, and Treasury International Capital reports are released.

Aussie weakens against the pound

The Australian dollar remained in narrow ranges against sterling over the weekend, as rises in regional stock markets saw investors start to consider taking on riskier assets again. However, the pound remained weighed down by the BoE's continuing programme of quantitative easing. The central bank announced details to purchase another 5 billion pounds of UK Gilts. Little major domestic data is due out of either country today, so direction is likely to come from broader market movements as well as corporate news.

Kiwi dollar posts gains

The New Zealand dollar made small gains over the weekend, underpinned by increased demand for higher yielding currencies on the back of solid gains from equity markets. The kiwi also gained strength after the Reserve Bank of New Zealand signalled that it was near the end of its easing cycle.