Sterling up after CBI survey

The pound strengthened by 0.44 cents (0.27%) against the US dollar yesterday, finishing the day at $1.6567.

• In early trading yesterday sterling rose against the dollar, after a report released by the property company Hometrack showed the annual pace at which house prices in England and Wales were falling slowed for the third successive month.
  
• Together with the news from the CBI that British financial service companies were more positive now than at any time in the last two years, this report stoked sentiment towards the UK’s chances of recovery, benefiting the pound as a result.
  
• However, the pound’s gains were capped by the news that Chinese officials were not looking to diversify their reserve currency holdings any time soon. This was positive news for the dollar, following months of debate about the use of an alternative global currency to the greenback.
  
• In trading so far today the pound has resumed its rise against the greenback as improved risk appetite continues to sweep the market.
  
• There are important announcements due on both sides of the Atlantic today. In the UK, revised first-quarter GDP and the latest current account figures are out at 09.30 BST, whilst in the US CB Consumer Confidence data is out at 15.00 BST.

Euro strengthens after confidence survey

The euro strengthened by 0.26 cents (0.18%) against the US dollar yesterday to close the day at $1.4081.

• In early trading yesterday the euro rose slightly against the dollar as gains on global equity markets stoked appetite for riskier currencies.
  
• In addition, a better-than-expected eurozone consumer confidence survey for June released by the European Commission buoyed demand for the single currency. It revealed a rise to 73.3 points this month from 70.2 points in May.
  
• However, the news that Chinese officials had ruled out any sudden changes in their foreign exchange reserve policy stemmed the dollar’s falls. Most of China’s currency reserves are held in US Treasuries.
  
• In trading so far today the euro has resumed its rise against the greenback as improved risk appetite continues to sweep the market.
  
• There are no major announcements due in the eurozone today, whilst in the US CB Consumer Confidence data is out at 15.00 BST.

Aussie weakens after falls on equity markets

Sterling strengthened against the aussie yesterday after a drop in local stocks reduced demand for the higher-yielding currency.

• Following mixed cues from Wall Street on Friday, Australian stocks fell yesterday, weakening the higher-yielding aussie as a result. A drop in oil prices also weakened the Australian currency.
  
• Important retail sales and building approvals data are out in Australia overnight tonight, with revised UK first-quarter GDP and current account figures out at 09.30 BST this morning.

Kiwi gains on business survey

The kiwi rose against the pound yesterday after a report showed growing optimism amongst New Zealand’s business community.

• A report released by ANZ National Bank Ltd. spurred the kiwi’s gains yesterday, after it revealed New Zealand businesses became more optimistic in June. A net 8.3% of companies surveyed said they expected sales and profit to increase over the next 12 months, compared with 5.5% last month.
  
• However, strong London equities capped the kiwi’s gains to some extent, although it still finished comfortably up after enduring losses at the end of last week.
  
• Important UK revised GDP and Current Account data is out at 09.30 BST today.

Sterling up against euro on data-less Friday

Sterling strengthened by 0.52 cents (0.44%) against the euro on Friday, closing the day at 1.1753.

• In early trading on Friday sterling strengthened against the euro as traders took their lead from strong London equities.
  
• With little data out, Friday also gave investors the chance to reflect on some important economic announcements out earlier in the week. Bank of England Governor Mervyn King’s cautionary comments on Wednesday dampened demand for sterling, however the European Central Bank’s one-year refinancing plan announced the same day also caused jitters in the market.
  
• This resulted in a volatile day’s trading, with the pound eventually heading higher as traders reassessed their views from earlier in the week.
  
• In trading so far today the pound is down very slightly against the single currency as investors look ahead to this week’s important announcements, including the European Central Bank’s interest rate decision on Thursday.
  
• There are no major announcements due in the UK or eurozone today.

Pound up over 1.5 cents vs. US dollar

The pound rose sharply against the US dollar on Friday, finishing the day up 1.54 cents (0.94%) at $1.6523.

• In early trading on Friday the dollar weakened against sterling, during a day light on data. Strong London equities helped the pound’s cause early on, as did investor reaction to the US Fed’s monetary policy announcement late on Wednesday.
  
• The Fed’s clear hint that there would be no interest rate rises for the rest of this year spurred demand for higher-risk currencies like the pound on Friday, as investors looked beyond the US for assets which could offer better returns.
  
• However, gloomy growth forecasts released by the OECD earlier in the week, as well as Mervyn King’s downbeat testimony last Wednesday, capped sterling’s gains.
  
• In trading so far today the pound has fallen against the greenback, despite a CBI survey released this morning suggesting the UK financial sector is more upbeat now than at any time in the last two years.
  
• There are no major announcements due in the UK or US today.

Euro finishes up over $1.40

The euro rose against the US dollar for the second day in a row on Friday, closing up 0.69 cents (0.49%) at $1.4055.

• In early trading on Friday the euro strengthened against the dollar, after strong gains on European equities improved investor risk appetite.
  
• In addition, the US Fed’s clear indication on Wednesday that interest rates would not increase for the rest of this year prompted investors to look elsewhere for higher-yielding assets. There had been some talk in the market before their latest meeting that a rate rise may be on the cards following some positive data, however the Fed’s cautionary announcement dampened these hopes, weakening the dollar as a result.
  
• In trading so far today the euro has dipped against the greenback as investors look ahead to some important economic announcements out this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie ends 3-day rally vs. sterling

The aussie fell against the pound on Friday, ending a three-day rally as limited data and falls on global equity markets reduced investor appetite for riskier currencies.

• With little data out, Friday gave traders a chance to reassess last week’s economic releases. Bank of England Governor Mervyn King’s gloomy testimony on Wednesday contributed to sterling’s falls mid-week, however there was a feeling on Friday that the UK currency may have been oversold, helping it gain ground.
  
• There are no major announcements due in the UK or Australia today, so traders will take their lead from equities and broader market movements.

Kiwi weakens after weak GDP data

The kiwi weakened against sterling on Friday after disappointing New Zealand first-quarter GDP data hit demand for the South Pacific nation’s currency.

• The news that New Zealand’s economy had shrank by 1.0% in the last quarter was poorly taken by the markets, as they were expecting a 0.7% contraction. This fuelled speculation that the Reserve Bank of New Zealand may have to cut interest rates further.
  
• There are no major announcements due in the UK or New Zealand today, so investors will likely take their direction from broader market movements.

Pound weakens after King's comments

The pound weakened by 0.76 cents (0.65%) against the euro yesterday to close the day at 1.1701.

• In early trading yesterday sterling weakened against the euro after London equity markets turned lower initially.
  
• Bank of England Governor Mervyn King’s dovish assessment on Wednesday also pushed sterling lower mid-morning, after he said the UK’s economic recovery could still be a ‘long, hard slog’ despite more encouraging data recently. This led investors to believe the central bank had no intention of tightening its policy anytime soon.
  
• In addition, the Organisation for Economic Cooperation and Development’s bleak prediction the day before that Britain’s economy would contract 4.3% this year and stagnate in 2010 kept up the downward pressure on sterling.
  
• In trading so far today the pound has dipped slightly lower against the euro as investors continue to digest some important announcements out this week.
  
• There are no major announcements due in the UK or eurozone today.