Sterling loses further ground to the euro

The pound lost a further 0.32 cents against the single currency yesterday as European equity markets remained sluggish.

• Economic announcements were light on the ground in the UK, however traders remained concerned over hopes of an economic recovery as they continued to sell off the pound.
  
• The FTSE 100 had a tough day as it slipped below the 4,200 mark as oil, mining, and the banking sectors all came under selling pressure.
  News out of the eurozone was little better, as the Sentix Investor Confidence survey was released much worse than anticipated.
  
• In early trading today, the pound is continuing to trade within yesterday’s ranges as investors remain cautious.
  
• The market will take note from industrial and manufacturing production surveys released in the UK this morning, whilst within Germany, factory orders data is released.

Sterling hits 1-month low against the US dollar

The pound fell against the US dollar yesterday, hitting a one month low as concerns about the UK economy and expectations that the Bank of England would increase its quantitative easing programme saw the pound heavily sold off.

• Lingering concerns about the global economy, fed by Thursday’s poor US payrolls figures, saw risk appetite suffer and caution surfaced ahead of this Thursday’s Bank of England meeting.
  
• Falling equity prices also undermined the pound’s position yesterday.
  
• Today sees a barrage of economic data released. In the UK, industrial and manufacturing production data is announced this morning and BRC Shop Price Index, Nationwide Consumer Confidence and NIESR GDP Estimate figures are released later in the day.
  
• In the US, API Crude Oil Inventories and ABC/Washington Post Consumer Confidence data will be announced this evening.

Euro makes small gains against the US dollar

The euro strengthened against the US dollar by 0.30 cents on Monday, to finish the day at $1.3981.

• Weak eurozone retail data and a grim US jobs report released last week reaffirmed fears over the recovery of the global economy, which in turn increased risk aversion as it pointed to the view that investors have been far too optimistic regarding recovery prospects.
  
• However, despite this increased risk aversion the dollar’s gains were limited yesterday due to speculation that its status as the global reserve currency may be discussed at the G8 meeting in Italy. There have been reports that China is keen to discuss a new global reserve currency, however the vice minister said in Rome on Sunday that the dollar would be the most important international reserve currency for years, according to China's official Xinhua news agency.
  
• The dollar strengthened against the euro this morning in anticipation of the Group of Eight (G-8) meeting due to take place this week. In Asia on Monday, the dollar was mixed against other major currencies as investor caution grew ahead of a summit of the Group of Eight (G-8) economic powers this week.

Sterling falls sharply against kiwi dollar

The pound fell sharply against the New Zealand dollar yesterday, losing 1.38% to finish the day at 2.5572.

• Sterling fell sharply against the kiwi dollar in the early morning yesterday, as investors continued to sell off the British currency on growing risk aversion.
  
• The pound levelled off in the afternoon, before resuming its fall overnight amid speculation that the Bank of England plans further quantitative easing.
  
• The kiwi dollar also got a boost this morning from better than expected business confidence figures for the second quarter, suggesting the economy may pull itself out of recession by the end of the year.

Pound weakens against the Australian dollar

Sterling lost further ground to the Australian dollar yesterday, falling by 0.33% to close the day at 2.0421.

• In a volatile day’s trading yesterday, the pound weakened against the Australian dollar in the morning as investors continued to sell off the British currency.
  
• However, sterling was temporarily dragged up in the afternoon following a small rally on the FTSE, although the pound’s gains were given back in the evening after London equities still finished down on the day.
  
• The pound lost further ground to the Australian dollar early this morning, after the Reserve Bank of Australia kept interest rates on hold at 3%.
  
• The pound has continued to lose ground to the Australian dollar this morning on speculation that the Bank of England plans further action to boost the economy, and as forecasts for weakening company earnings hurts stocks.