Sterling up against euro on data-less Friday

Sterling strengthened by 0.52 cents (0.44%) against the euro on Friday, closing the day at 1.1753.

• In early trading on Friday sterling strengthened against the euro as traders took their lead from strong London equities.
  
• With little data out, Friday also gave investors the chance to reflect on some important economic announcements out earlier in the week. Bank of England Governor Mervyn King’s cautionary comments on Wednesday dampened demand for sterling, however the European Central Bank’s one-year refinancing plan announced the same day also caused jitters in the market.
  
• This resulted in a volatile day’s trading, with the pound eventually heading higher as traders reassessed their views from earlier in the week.
  
• In trading so far today the pound is down very slightly against the single currency as investors look ahead to this week’s important announcements, including the European Central Bank’s interest rate decision on Thursday.
  
• There are no major announcements due in the UK or eurozone today.

Pound up over 1.5 cents vs. US dollar

The pound rose sharply against the US dollar on Friday, finishing the day up 1.54 cents (0.94%) at $1.6523.

• In early trading on Friday the dollar weakened against sterling, during a day light on data. Strong London equities helped the pound’s cause early on, as did investor reaction to the US Fed’s monetary policy announcement late on Wednesday.
  
• The Fed’s clear hint that there would be no interest rate rises for the rest of this year spurred demand for higher-risk currencies like the pound on Friday, as investors looked beyond the US for assets which could offer better returns.
  
• However, gloomy growth forecasts released by the OECD earlier in the week, as well as Mervyn King’s downbeat testimony last Wednesday, capped sterling’s gains.
  
• In trading so far today the pound has fallen against the greenback, despite a CBI survey released this morning suggesting the UK financial sector is more upbeat now than at any time in the last two years.
  
• There are no major announcements due in the UK or US today.

Euro finishes up over $1.40

The euro rose against the US dollar for the second day in a row on Friday, closing up 0.69 cents (0.49%) at $1.4055.

• In early trading on Friday the euro strengthened against the dollar, after strong gains on European equities improved investor risk appetite.
  
• In addition, the US Fed’s clear indication on Wednesday that interest rates would not increase for the rest of this year prompted investors to look elsewhere for higher-yielding assets. There had been some talk in the market before their latest meeting that a rate rise may be on the cards following some positive data, however the Fed’s cautionary announcement dampened these hopes, weakening the dollar as a result.
  
• In trading so far today the euro has dipped against the greenback as investors look ahead to some important economic announcements out this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie ends 3-day rally vs. sterling

The aussie fell against the pound on Friday, ending a three-day rally as limited data and falls on global equity markets reduced investor appetite for riskier currencies.

• With little data out, Friday gave traders a chance to reassess last week’s economic releases. Bank of England Governor Mervyn King’s gloomy testimony on Wednesday contributed to sterling’s falls mid-week, however there was a feeling on Friday that the UK currency may have been oversold, helping it gain ground.
  
• There are no major announcements due in the UK or Australia today, so traders will take their lead from equities and broader market movements.

Kiwi weakens after weak GDP data

The kiwi weakened against sterling on Friday after disappointing New Zealand first-quarter GDP data hit demand for the South Pacific nation’s currency.

• The news that New Zealand’s economy had shrank by 1.0% in the last quarter was poorly taken by the markets, as they were expecting a 0.7% contraction. This fuelled speculation that the Reserve Bank of New Zealand may have to cut interest rates further.
  
• There are no major announcements due in the UK or New Zealand today, so investors will likely take their direction from broader market movements.