The pound finishes up against the euro

The pound strengthened by 0.84 cents (0.72%) against the euro on Friday, closing the day at 1.1829.

• In early trading on Friday sterling strengthened against the euro, as the lack of economic data prompted traders to take their lead from equity markets. The FTSE 100 eventually finished the day up 65.07 (1.52%).
  
• It also allowed investors to reconsider a week of less positive data for the pound, and therefore reassess whether the UK economy really is on the road to recovery. Poor retail sales and unemployment data earlier in the week had hit sterling, however sentiment improved on Friday.
  
• In addition, a warning from the European Central Bank that banks in the region might face another $283 billion of losses by the end of next year reduced appetite for the single currency.
  
• In trading so far today the pound has continued its rise against the euro, after comments over the weekend from Jean-Claude Trichet, President of the ECB, who said there would be no more stimulus packages in the region. ‘In our analysis, this is sufficient,’ he said.
  
• There are no major announcements due in the UK today.

Sterling rises over 1.5 cents vs. US Dollar on Friday

Sterling rose sharply against the US dollar on Friday, finishing up 1.63 cents (1%) at $1.6492.

• In early trading on Friday sterling gained against the dollar, as rising share prices stoked some demand for higher-risk currencies like the pound. The FTSE 100 eventually closed up 1.52%.
  
• The dearth of economic data on both sides of the Atlantic also encouraged investors to re-examine optimism that the UK economy may soon recover, a view that was fuelled by more positive data two weeks ago. But poor retail sales data in particular, in addition to speeches by Chancellor Alistair Darling and BoE Governor Mervyn King urging caution about improvements in the economy, weighed on the pound last week. However, sentiment improved on Friday.
  
• In trading so far today the pound has dipped against the greenback, after a report released by the Centre for Economics and Business Research said roughly 334,000 jobs would be lost across the business service sectors in the next three years.
  
• There are no major announcements due in the UK or US today.

Euro dips against dollar

The euro dipped by 0.41 cents (0.29%) against the US dollar yesterday to finish the day at $1.3939.

• In early trading on Friday the euro strengthened against the dollar, as more upbeat US data and gains in European equities boosted hopes that a global economic recovery was on course.
  
• The euro’s gains were limited, however, as investors were wary of taking on large positions ahead of the US Fed’s policy meeting later this week and issuance of another record batch of US government debt.
  
• In trading so far today the single currency has weakened sharply against the dollar, after news over the weekend that President of the European Central Bank, Jean-Claude Trichet, had no intention of extending the ‘completely extraordinary’ stimulus packages already unveiled by the bank.

Aussie weakens despite Asian stock gains

The aussie slipped against the pound on Friday, despite rises in Asian stocks spurring demand for higher-yielding assets.

• On a good day for the pound against a basket of currencies, the aussie slipped against the pound on Friday as improved sentiment about the UK economy swept the market.
  
• Earlier in the week, poor UK retail sales and unemployment data had hit sterling, however gains on London equity markets helped the pound gain ground on Friday.
  
• There are no major announcements due in the UK or Australia today so traders are likely to take their lead from broader market movements.

Sterling strengthens vs. kiwi on FTSE gains

The pound strengthened against the kiwi on Friday, despite investors being drawn to the South Pacific nation’s assets because of its 2.5% interest rate.

• The kiwi weakened against sterling on Friday as a 1.52% rise on the FTSE 100 buoyed hope that the UK economy was close to a recovery. Poor data earlier in the week had hit the pound.
  
• There are no major announcements due in the UK or New Zealand today so traders are likely to take their direction from broader market movements.

Sterling dips against euro after weak figures

Sterling weakened by 0.16 cents (0.14%) against the euro yesterday to close the day at 1.1745.

• In early trading yesterday sterling hit a one-week low against the euro, after data showed UK retail sales unexpectedly fell in May, down 0.6% from the previous month. Overall, that left retail sales 1.6% lower than the same month a year ago.
  
• The pound also fell yesterday after separate figures showed Britain’s public finances deteriorated more than expected last month, with public sector net borrowing rising to a record high of nearly £20 billion.
  
• In trading so far today the pound has dipped slightly against the euro as investors continue to assess recent less positive announcements.
  
• There are no major announcements due in the eurozone or UK today.

Cable down after UK retail sales data

Sterling weakened by 0.68 cents (0.41%) against the US dollar yesterday, finishing the day at $1.6329.

• In early trading yesterday the pound initially rose on the back of improved risk appetite, before nose-diving because of disappointing UK retail sales figures. Sales fell 0.6% in May, well down on analysts’ forecasts of a 0.4% gain. That left them 1.6% lower than in the same month a year ago.
  
• Meanwhile, a Bank of England report showing that lending to British businesses fell by its biggest amount in nearly nine years in April increased selling pressure on sterling. Investors took this news as a sign the recession was far from over despite some positive data recently, with UK companies still finding it difficult to attain credit.
  
• In trading so far today the pound has made limited gains against the greenback as investors consider recent developments.
  
• There are no major announcements out in the UK or US today.

Euro dips against US dollar yesterday

The euro dipped by 0.41 cents (0.29%) against the US dollar yesterday to finish the day at $1.3898.

• In early trading yesterday, the dollar fell against the single currency after the latest Philadelphia Fed survey came in above expectations and much less negative than the month before. The index of business conditions in the US Mid-Atlantic region was -2.2 this month, well ahead of last month’s -22.6, prompting increased demand for riskier currencies like the euro as investors speculated that the world’s largest economy could be on the cusp of recovery.
  
• However, US Unemployment Claims figures released mid-afternoon stifled this optimism as they came in worse than the month before, prompting investors to head back to the safe-haven of the greenback. Jobless claims stood at 608k in May.
  
• In trading so far today, the euro has risen against the dollar as traders consider the economic releases out so far this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie makes solid gains vs. sterling

The Australian dollar made solid gains against sterling yesterday, as doubts arose over the UK's economic recovery.

• UK retail sales data surprised markets by falling 0.6 percent in May, against a forecast gain of 0.4 percent.
  
• Other news also showed that Britain’s public finances deteriorated more than expected last month, while lending to British businesses fell by the largest amount in 9 years.
  
• This data has illustrated that there is still a large gap between recent investor optimism and economic fundamentals.
  
• This suggests that any economic recovery is going to be fragile and likely to be stuttering, with economic confidence and optimism likely to continue to ebb and flow on either positive or negative data.

Kiwi takes advantage of weak pound

The New Zealand dollar remained within recent ranges against the aussie yesterday, but managed to gain some ground on a weakening pound.

• The kiwi remained relatively steady as markets continue to remain cautious over higher yielding currencies, given uncertainty over the global economic recovery.
  
• With no local data due investor are likely to turn their focus to next week’s first-quarter current account and growth data.