Pound dips on Tuesday's GDP downgrade

The pound weakened by 0.79 cents (0.67%) against the euro yesterday to close the day at 1.1650.

• In early trading yesterday the pound weakened against the euro, as the previous day’s unexpectedly sharp downward revision in British first-quarter GDP continued to weigh on sterling.
  
• In addition, data out in the eurozone, which showed a slowing in the deterioration in the region’s manufacturing sector for the fourth straight month, also helped the euro’s cause mid-morning.
  
• Sterling fell despite better-than-expected manufacturing PMI figures and a strong performance from London equities, which started the new quarter on the front foot. The FTSE 100 eventually finished the day up 91.50 (2.15%).
  
• In trading so far today, the pound has continued its slide against the single currency as investors await the European Central Bank’s latest interest rate decision at 12.45 BST today. There are no major announcements due in the UK.

Pound up as FTSE gains over 2%

The pound strengthened by 0.17 cents (0.10%) against the US dollar yesterday, finishing the day at $1.6478.

• In early trading yesterday, sterling strengthened against the greenback after better-than-expected UK manufacturing PMI data buoyed demand for the UK currency. The index rose to 47.0 in June from 45.4 in May, the highest it has been since May 2008.
  
• Strong gains on London equity markets also helped the pound’s cause as they started the third quarter positively. The FTSE 100 eventually finished up 91.50 (2.15%).
  
• However, the news that US private employers cut 473k jobs in June capped demand for the riskier pound early yesterday afternoon. The figure was more than expected but less than the 485k jobs lost in May. US pending home sales data also came in worse-than-forecast, but American manufacturing PMI figures were ahead of predictions at 44.8. These also had an effect on the pound’s performance in late trading.
  
• In trading so far today, the pound has weakened against the greenback as traders eye important US Non-Farms data at 13.30 BST. There are no major announcements due in the UK today.

Euro up despite US job figures

The euro strengthened by 1.09 cents (0.78%) against the US dollar yesterday to finish the day at $1.4140.

• In early trading yesterday, the euro strengthened against the dollar as better-than-expected manufacturing data released in the eurozone indicated the 16-nation bloc will contract much less in the second quarter even if growth remains a long way off.
  
• Buoyant European equity markets also helped extend the euro’s gains as risk appetite improved, however the single currency’s progress was checked in the early afternoon following the release of surprisingly poor US employment figures. US private employers cut 473k jobs last month, more than forecast but less than the 485k jobs lost in May.
  
• Worse-than-expected US pending home sales data, released mid-afternoon, also capped the euro’s gains to some extent, after they came in at 0.1% this month, well below the 0.7% analysts had been expecting.
  
• However, US manufacturing PMI figures were ahead of forecast at 44.8, stemming the single currency’s dip to some degree.
  
• In trading so far today, the euro has pared some of yesterday’s gains as investors await important announcements out today. I n the eurozone, the European Central Bank’s latest interest rate decision is due at 12.45 BST, whilst in the US important Non-Farms employment data is out at 13.30 BST.

Aussie pars gains after weak trade balance figs

Sterling weakened slightly against the Australian dollar yesterday, but recovering overnight after worse-than-expected Australian Trade Balance figures were released.

• The aussie dollar was firm against the pound yesterday ahead of the Trade Balance figures, as investors only anticipated a small deficit.
  
• However, when the figures were released overnight they undermined demand for the Australian dollar, as the figures revealed a trade deficit 4 times larger than had been expected.
  
• Investors will now turn their attention to important US employment figures to determine risk appetite in the market.

Kiwi falls after dairy price slide

Sterling strengthened against the kiwi dollar yesterday, after better-than-expected UK manufacturing data and a strong performance on London equity markets.

• Stronger-than-forecast UK manufacturing PMI data buoyed demand for the UK currency mid-morning yesterday. The index rose to 47.0 in June, the highest it has been since May 2008.
  
• The downward pressure on the kiwi was also increased after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, reported whole-milk powder prices had slid to a five-year low.
  
• Finally, strong London equities drove sterling’s gains yesterday, with the FTSE 100 eventually finishing up 91.50 (2.15%).