Sterling breaks through 1.17 level vs. EUR

The pound continued its rise against the euro yesterday, strengthening 0.6 cents (0.51%) to close the day at 1.1756.

• In early trading yesterday, sterling hit a year-high against the euro after a Bank of England/GfK NOP poll showed rising UK inflation expectations. Its rally was also aided by a NIESR report which showed the British economy grew 0.2% on the month in April and 0.1% in May.
  
• These announcements added to a string of fairly firm UK figures out over the past few days, which continued to boost the pound. In particular, better-than-expected industrial production data released on Wednesday lifted investor appetite for sterling.
  
• Finally, strong gains on London equity markets also contributed to sterling’s advances in late trading. The FTSE 100 eventually finished up 25.12 points (0.57%).
  
• So far today, the pound has dipped slightly against the euro as investors continue to digest the data released this week.
  
• There are no major announcements due in the UK or eurozone today.

Sterling closes at a six-month high against US Dollar

Sterling rose sharply against the US dollar yesterday to close at a six-month high. It finished at 1.6589, up 2.33 cents (1.42%) on the day.

• In early trading yesterday, sterling resumed its rise against the greenback as risk appetite continued to improve following solid gains on stocks and oil prices. The FTSE 100 eventually finished the day up 25.12 points (0.57%).
  
• Two polls showing rising UK inflation expectations and possible economic growth in April also aided the pound’s gains mid-morning. These surveys were just the latest in a string of more positive data out recently which have bolstered the view that the UK economy may be recovering.
  
• In trading so far today, sterling has pared some of the gains it made yesterday as investors continue to assess the data out this week.
  
• There are no major announcements due in the US or UK today.

Euro strongly over $1.41 vs. USD

The euro strengthened by 1.3 cents (0.93%) against the US dollar yesterday to finish the day at $1.4108.

• In early trading yesterday, the single currency strengthened against the dollar as investors looked more favourably upon higher-yielding currencies like the euro. Increasingly positive economic data recently has prompted investors to look beyond the perceived safe-haven of the greenback.
  
• Adding to the euro’s gains was the news a G8 source had told Reuters that the IMF had raised its 2010 global growth forecasts to 2.4% from April’s estimate of 1.9%. This bolstered demand for perceived riskier currencies like the euro.
  
• In trading so far today, the euro has dipped against the dollar as investors eye this weekend’s G8 meeting in Italy with interest.
  
• There are no major announcements due in the UK or eurozone today.

Aussie strengthens against pound on US data

The Australian dollar strengthened against the pound yesterday, after positive economic data was released in the US.

• The US data fuelled speculation that the economic deterioration in the world economy may be coming to an end. The news saw demand for risk appetite rise with commodity linked currencies, such as the Aussie, benefitting the most.
  
• Direction today will be largely driven by broader economic sentiment.

Kiwi shoots up on rate hold

The Kiwi strengthened by just under four cents against sterling yesterday, following the Reserve Bank of New Zealand’s decision to keep interest rates on hold this week at 2.5%.

• Much like the Aussie, the Kiwi benefitted from positive US data being released.
  
• The New Zealand dollar has also benefitted from better-than-expected retail sales data being released overnight.