Pound makes marginal gains vs kiwi following a decline in risk appetite

Dulled risk sentiment for higher risk currencies yesterday slowed the pound’s rate of decline against the New Zealand dollar, closing the day yesterday at 2.3768.

• Having made gains of 0.4% against the kiwi on Friday, the pound declined marginally in trading yesterday.
  
• However, the rate of decline was much diminished from last week, with the pound only losing 0.013 of a cent in yesterday’s trading.
  
• Following the RBA’s statement, the New Zealand dollar has also suffered slightly as risk appetite for higher-yielding currencies took a step back.
  
• As there is little data emerging from New Zealand’s central bank until there monetary policy statement on September 10 th, analysts have said that it will take a change in international sentiment toward risk to alter the kiwi current range.
  
• Indeed, the pound has begun gaining ground in trading so far this morning, recovering 0.12%.

Sterling gains vs aussie following dovish RBA statement

Having continued to lose ground on Friday, the pound has reversed the trend, following the RBA statement in the early hours of this morning.

• With European stocks and oil prices up on Friday, investors’ appetite for risk supported high-yielding currencies like the aussie.
  
• Sterling continued to lose ground yesterday following as investor sentiment was buoyed by the positive news emerging from the Japanese election and the corresponding improved Asian equities.
  
• The Australian dollar as capped its gains this morning however after the Reserve Bank of Australia said current monetary policy was still appropriate and left interest rates unchanged at 3.00%.
  
• Investors had widely expected the RBA to sound more hawkish, but their comments allowed the pound to recover, which is up over half a percent on the day.

Decline in stock prices, devalues the euro vs the US dollar

The single currency reversed early gains against the greenback following a decline in investor sentiment for "risker" currencies.

• The single currency lost ground on Friday as both the unemployment rate and the CPI flash estimate figures came in below expectations, reminding investors not to over-estimate the pace of the eurozone’s recovery.
  
• In trading yesterday, the euro was able to regain all the ground lost against the greenback, as inflation rates increased from -0.7% in July to -0.2% in August.
  
• The euro has failed to realise these gains agains today, with the single currency currently trading 0.15% lowers, as a decrease in European equity value erodes investment sentiment in the market.
  
• The eurozone unemployment rate was released today at 10:00BST, which revealed that unemployment remained at a high of 9.5% this month, which added selling pressure to the single currency.
  
• In the US, data on the manufacturing industry and home sales is released at 15:00BST.

Dollar recovers Bank Holiday losses following weak UK data

The pound made marginal losses against the greenback over the Bank Holiday, to close the day at $1.6288.

• Sterling traded marginally higher on Friday morning as data bolstered hopes that the UK will return to growth in the current quarter by reporting that the economy contracted by 0.7% between April and June, not 0.8% as previously stated.
  
• However, the greenback recovered its losses to close the day marginally up, as risk appetite was hindered by slightly weaker-than-expected consumer spending figures emerged from the US.
  
• Although trading was closed in London yesterday, sterling received a boost from robust gains in world stocks, resulting in improved risk appetite.
  
• In trading this morning, sterling has erased early gains against the greenback as investor sentiment was discouraged by weak UK manufacturing data and is currently trading at 1.6231.
  
• Demand for sterling could continue today if a US Manufacturing PMI produces a figure above 50, as predicted, which would indicate industry expansion and support risk sentiment. There is also important US home sales data released at 15:00BST today.

Pound fails to capitalize on Friday's gains vs the euro

Sterling failed to capitalise on gains made on Friday as investors remained cautious of overestimating the UK’s revised GDP figure.

• Sterling inched up on Friday after figures showed that the UK economy contracted at a slightly slower rate in the second quarter than initial estimates.
  
• The 0.1% revision, although better-than-expected, had a very limited effect on the pound, with investors remaining cautious following previous weak business investment data.
  
• Analysts warned that the small improvement did not obscure the severity of the UK recession and the challenges still facing the economy.
  
• Additionally, traders were hesitant to take on significant positions in the currency ahead of the Bank Holiday.
  
• In trading yesterday, the pound held steady against the single currency to close the day marginally down at 1.1364.
  
• Sterling started to recover its losses against the euro this morning following relatively unimpressive German retail sales figures which dulled support for the currency.
  
• However, worse-than-expected data released about the UK manufacturing sector at 09:30BST has hurt the pound, which is currently trading 0.23% down for the day.