Sterling falls vs. euro on flat FTSE

Sterling fell by 0.99 cents (0.84%) against the euro yesterday to close the day at 1.1686.

• In early trading yesterday sterling dropped by over a cent against the euro, after a tumble on US stocks overnight prompted London equities to head lower initially.
  
• The pound fell despite better-than-expected figures released by the British Bankers’ Association, which showed the number of mortgages approved for house purchases in May rose 15.8% on a year earlier, ending months of annual declines. However, approvals remain well below historical averages.
  
• In trading so far today the pound has continued its slide against the euro, as investors eye the large amount of data out today.
  
• There are no major economic releases due in the eurozone today, whilst in the UK there are a series of announcements out. At 11.00 BST, CBI Realised Sales are out, followed by Inflation Report Hearings at 14.30 BST. Finally, Bank of England Governor Mervyn King is due to give a speech at 15.45 BST.

Sterling edges ahead of US Dollar after choppy day's trading

In a choppy day’s trading yesterday, sterling strengthened by 1.07 cents (0.65%) against the US dollar to finish at $1.6452.

• In early trading yesterday the pound weakened against the dollar after heavy falls on US and Asian stock markets overnight rocked risk appetite.
  
• However, recurring concerns about reserve currency diversification helped the pound yesterday, after ratings agency Moody’s said one threat to the US’s triple-A sovereign credit rating would be if it lost its status as the world’s primary reserve currency.
  
• Investors were nevertheless cautious about taking on large positions ahead of the US Fed’s latest interest rate decision due later today, capping sterling’s gains.
  
• In addition, sterling also lost momentum against the greenback after US data showed sales of previously owned homes in the country rose at a slower-than-expected pace in May.
  
• In trading so far today, the pound has continued its rise against the dollar as investors prepare themselves for a raft of data out today.
  
• In the US, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally and most importantly, at 19.15 BST the US Fed gives their latest interest rate announcement and statement. In the UK, CBI Realised Sales are out at 11.00 BST, followed by Inflation Report Hearings at 14.30 BST. Lastly, Bank of England Governor Mervyn King is set to give a speech at 15.45 BST.

Euro up over 2 cents vs. US Dollar

The euro rose considerably against the euro yesterday, strengthening 2.1 cents (1.51%) to close the day at $1.4076.

• In early trading yesterday the single currency rose sharply against the greenback, after European equity markets stabilised following steep falls on US equities overnight. On Monday, the DOW suffered its worst one-day loss in two months.
  
• The dollar also fell as the market awaited the outcome of a US Fed policy meeting later today, and a record $104 billion in US debt issuance this week. Traders will be watching closely to see what the Fed says about the economic outlook and its debt-buying programme, with markets skittish over the possibility of dovish comments.
  
• The single currency’s gains were also slightly capped by US housing data released mid-afternoon, which showed a slower-than-forecast rise in sales of previously owned homes.
  
• In trading so far today the euro has continued its rise against the greenback, as investors brace themselves for some important announcements out in the US.
  
• First, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally, the US Fed is to deliver its latest interest rate announcement and statement at 19.15 BST.

Aussie makes small gains over sterling

The aussie made small gains against the pound yesterday, as investors wait on the sidelines ahead of the Federal Reserve’s policy decision due this evening.

• The US Fed is set to issue a statement after its latest policy meeting at 19.15 BST today, with some investors suggesting the central bank may try and curb speculation of any policy tightening this year.
  
• Traders are also wary of taking large aussie positions at present, as they are undecided about whether recent weakness in equity markets was just a short-term pull-back, or the start of a more protracted decline.

Kiwi makes strong gains vs. sterling as equities flat

The New Zealand dollar made strong gains against sterling yesterday, gaining 2.75 cents against the pound as investors reconsidered riskier assets.

• A flat day on London equities, following heavy falls the day before, led investors to sell the pound and the US dollar to buy back into higher-yielding currencies.
  
• Today, investors will turn their attention to the raft of economic releases out in the UK and US.