Pound continues to strengthen against the euro

The pound continued its recent upward trend against the single currency yesterday as investors were reassured by better than expected earnings at Barclays bank. Shares in the bank rose by more than 10% in response to the news, as there was a realisation that the bank did relatively well considering the economic turbulence of 2008. Indeed, sterling’s gains came despite Labour’s school secretary Ed Balls warning that the world is facing up to its worst recession in more than a century.

The Royal Institute of Chartered Surveyors reported overnight that interest in the housing market continued to pick up in January, although the average number of transactions showed little change, as the housing market remains sluggish in tight credit conditions. The UK releases its trade balance data this morning, whilst there are no major announcements due in the eurozone.

Sterling makes gains against the dollar

The pound started the week well against the US dollar, strengthening by 0.83 cents to close that day at 1.4895. The pound’s strength came from the announcement of better than expected earnings from Barclays bank who posted pre-tax profits of £6.1 billion for 2008. Improved investor sentiment was also coupled with lingering concerns for the US economy after Friday's poor unemployment data in the US, and investors remained cautious over Obama's fiscal stimulus package.

In today's trading the dollar has strengthened back over the pound, reaching as low as 1.4775 ahead of the announcement by Treasury Secretary Timothy Geithner about the details of a new bailout plan. This will take place at 16.00 GMT, before the announcement of ABC/Washington Post Consumer Confidence figures at 22.00 GMT.

Euro strengthens against the US dollar

The euro strengthened over the US dollar by 0.35 cents on Monday to close at the 1.3002 as uncertainty over the announcement of details for a fiscal stimulus package and further bank bailout surfaced. At 16.00 GMT today there will be an announcement by Treasury Secretary Timothy Geithner about the details of the new bailout plan, and the market will remain cautious until the particulars are confirmed. Investors speculate that the new plan will move away from the idea of having a stand alone, government backed 'bad bank' and instead propose a public-private partnership that could buy up to $500 billion worth of distressed assets.

In today's trading the euro has fallen significantly against the dollar, reaching as low as 1.2812 as news that Russian banks have asked their government to try and renegotiate the repayment of up to $400 billion worth of debt to foreign banks. This hurt the euro as Russian banks have very close ties with their European neighbors who may be significantly exposed to these debts. Later today ABC/Washington Post Consumer Confidence figures are announced in the US as well as details of the new bank bail out plan. There are no major economic announcements in the eurozone today.

New Zealand dollar remains solid

The New Zealand dollar remained solid yesterday as investor risk aversion improved on the back of hopes for a quick passing of the US stimulus package and further plans to help the banking sector. Retail sales are due later this week, however until then the kiwi’s direction will be driven by broader market movements.

Australian dollar remains range-bound

The Australian dollar remained largely in recent ranges in choppy trade yesterday, as Britain's share market gained for a fifth straight day. The gains were led by banks after Barclays beat profit expectations. Investors will eye key UK trade data today which will give a better picture of how its export market is faring. The EU is Britain's largest market and the rapid downturn there is unlikely to bode well for UK exports. Markets will also focus on the US government’s release of its banking rescue plan. Given that the UK relies heavily on its financial sector this will be of particular importance.

Pound continues to gain ground over the euro

The pound edged up further against the euro on Friday, signaling two consecutive weeks of gains against the single currency. Investors have continued to react positively to the Bank of England’s decision on Thursday to cut their target interest rate to 1% - a new historic low. There is a belief that the Bank of England has been proactive in the past few months in attempting to rejuvenate the economy, whereas the European Central Bank may be slightly behind the curve. Interest rates were kept on hold at 2% in the eurozone, with many anticipating that these may have to fall much further to get their economies moving again.

There are no major economic announcements due in the UK today, whilst within the EU, Sentix release their investor confidence survey.

Pound strengthens against the US dollar

The pound strengthened against the dollar on Friday as the US announced the worst job losses data in 35 years. It is expected that this will renew the urgency for the US $900 billion stimulus package currently being considered by Congress. The pound also strengthened on the back of the Bank of England’s 50 basis points interest rate cut on Thursday. Analysts said while the US jobs data was bleak, the data was largely expected and focus quickly turned to how the data will help the stimulus plan get passed.

There are no significant announcements taking place in the US today.

Euro strengthens against the US dollar

The euro posted gains of 1.47 cents over the dollar on Friday to close the week up 1.91 cents at the 1.2938 level. The dollar was undermined on Friday after official US data showed that employers slashed 598,000 jobs in January, the steepest fall in 34 years. US unemployment now stands at 7.6% and many investors are hoping that Obama's fiscal stimulus package will be passed by Congress. However, the euro's gains were pared after figures showed that German industrial production had fallen by 4.6% in December.

In today's trading the dollar has strengthened back over the euro reaching as low as 1.2878 after it was confirmed that details of the proposed fiscal stimulus plan would be announced by the Treasury Secretary at 16.00 GMT tomorrow. It is anticipated that currencies would likely take their cue from how stock markets react to the plan. In today's trading there are no major economic announcements in the US, whilst in the eurozone it has been announced that the German trade balance surplus fell by €3.1 billion in December, to €6.9 billion.

Kiwi dollar strengthens against the pound

The New Zealand dollar gained over the weekend as gains in stock markets saw an improvement in appetite for riskier assets. Equity markets are still being used as the barometer for risk aversion, and optimism over a potential US stimulus package led to gains across most regional markets. The local market was closed on Friday due to a public holiday. Little domestic data is due until later in the week so the kiwi's direction is likely to follow broader market movements over the next couple of days.

Australian dollar strengthens against the pound

The Australian dollar made sharp gains against sterling late on Friday, after renewed optimism over a US stimulus package saw improved appetite for higher yielding currencies. Despite poor US jobs numbers, investors speculated that this could spur US lawmakers into deciding on the stimulus package more quickly. Wall Street rose on the back of this, dragging other major stock markets with it. Markets largely shrugged off further dismal economic data which showed sharp declines in both British manufacturing output and industrial production. This may indicate that markets are now satisfied that they have already priced in most of the bad news for the pound. Investors will today eye more forecasts for British growth; further readjustments downwards are likely.