Pound up as FTSE gains over 2%

The pound strengthened by 0.17 cents (0.10%) against the US dollar yesterday, finishing the day at $1.6478.

• In early trading yesterday, sterling strengthened against the greenback after better-than-expected UK manufacturing PMI data buoyed demand for the UK currency. The index rose to 47.0 in June from 45.4 in May, the highest it has been since May 2008.
  
• Strong gains on London equity markets also helped the pound’s cause as they started the third quarter positively. The FTSE 100 eventually finished up 91.50 (2.15%).
  
• However, the news that US private employers cut 473k jobs in June capped demand for the riskier pound early yesterday afternoon. The figure was more than expected but less than the 485k jobs lost in May. US pending home sales data also came in worse-than-forecast, but American manufacturing PMI figures were ahead of predictions at 44.8. These also had an effect on the pound’s performance in late trading.
  
• In trading so far today, the pound has weakened against the greenback as traders eye important US Non-Farms data at 13.30 BST. There are no major announcements due in the UK today.

Euro up despite US job figures

The euro strengthened by 1.09 cents (0.78%) against the US dollar yesterday to finish the day at $1.4140.

• In early trading yesterday, the euro strengthened against the dollar as better-than-expected manufacturing data released in the eurozone indicated the 16-nation bloc will contract much less in the second quarter even if growth remains a long way off.
  
• Buoyant European equity markets also helped extend the euro’s gains as risk appetite improved, however the single currency’s progress was checked in the early afternoon following the release of surprisingly poor US employment figures. US private employers cut 473k jobs last month, more than forecast but less than the 485k jobs lost in May.
  
• Worse-than-expected US pending home sales data, released mid-afternoon, also capped the euro’s gains to some extent, after they came in at 0.1% this month, well below the 0.7% analysts had been expecting.
  
• However, US manufacturing PMI figures were ahead of forecast at 44.8, stemming the single currency’s dip to some degree.
  
• In trading so far today, the euro has pared some of yesterday’s gains as investors await important announcements out today. I n the eurozone, the European Central Bank’s latest interest rate decision is due at 12.45 BST, whilst in the US important Non-Farms employment data is out at 13.30 BST.

Aussie pars gains after weak trade balance figs

Sterling weakened slightly against the Australian dollar yesterday, but recovering overnight after worse-than-expected Australian Trade Balance figures were released.

• The aussie dollar was firm against the pound yesterday ahead of the Trade Balance figures, as investors only anticipated a small deficit.
  
• However, when the figures were released overnight they undermined demand for the Australian dollar, as the figures revealed a trade deficit 4 times larger than had been expected.
  
• Investors will now turn their attention to important US employment figures to determine risk appetite in the market.

Kiwi falls after dairy price slide

Sterling strengthened against the kiwi dollar yesterday, after better-than-expected UK manufacturing data and a strong performance on London equity markets.

• Stronger-than-forecast UK manufacturing PMI data buoyed demand for the UK currency mid-morning yesterday. The index rose to 47.0 in June, the highest it has been since May 2008.
  
• The downward pressure on the kiwi was also increased after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, reported whole-milk powder prices had slid to a five-year low.
  
• Finally, strong London equities drove sterling’s gains yesterday, with the FTSE 100 eventually finishing up 91.50 (2.15%).

Sterling down after weak GDP and current account figures

Sterling weakened by 0.32 cents (0.27%) against the euro yesterday to close the day at 1.1729.

• In early trading yesterday sterling strengthened against the single currency, after Britain’s third-largest mortgage broker, Nationwide, reported a rise in house prices in June, the third rise in four months. Some traders took this as a sign that the ailing UK property market may be finally bottoming out.
  
• However, much worse-than-expected revised first-quarter UK GDP figures sent the pound into negative territory mid-morning. The data showed the UK’s economy contracted by 2.4% in the first three months of 2009, the largest decline in 50 years and a marked drop on the -1.9% originally published.
  
• The news that Lloyds Banking Group was to cut 2,100 jobs over the next three years also shook investor confidence in the market, as did a worse-than-expected UK current account figure released mid-morning, which registered at -£8.5 billion this month, well below analyst forecasts of -£6.5 billion.
  
• In trading so far today, the pound has resumed its slide against the single currency as investors continue to digest yesterday’s surprisingly weak GDP figure.
  
• There are no major announcements due in the eurozone today, whilst in the UK Manufacturing PMI data is due at 09.30 BST.

Sterling weakens over a cent vs. USD

Sterling weakened by 1.06 cents (0.64%) against the US dollar yesterday, finishing the day at $1.6461.

• In early trading yesterday sterling hit an eight-month high against the dollar, after better-than-expected data released by Nationwide buoyed investor hope that the ailing UK housing market may soon recover. Confounding predictions of a fall, the building society reported a 0.9% rise in house prices this month, taking the annual rate of house price decline to 9.3%.
  
• However, a scaling down of the UK’s revised first-quarter GDP figure from an initial reading of -1.9% to -2.4% prompted traders to dump the pound mid-morning, as some of the recent optimism surrounding the UK’s recovery cooled.
  
• Sterling’s falls were further extended yesterday afternoon following surprisingly weak US consumer confidence index data. It revealed a fall in June to 49.3 from a downwardly revised 54.8 in May, prompting investors to sell the higher-yielding pound to reduce risk.
  
• In trading so far today, the pound has continued its slide against the greenback as investors brace themselves for some important announcements today.
  
• In the UK, Manufacturing PMI data is due at 09.30 BST, whilst in the US ADP Non-Farm Employment Change figures are out at 13.15 BST, followed by ISM Manufacturing PMI and Pending Home Sales at 15.00 BST.

Euro falls as risk appetite wanes

The euro fell by 0.5 cents (0.36%) against the US dollar yesterday to finish the day at $1.4031.

• In early trading yesterday the single currency first strengthened then weakened against the dollar, after data released in the eurozone knocked early risk appetite in the market.
  
• Figures showed loans to eurozone businesses and households slowed to 3.7% in May from a year ago, well below forecasts of 4.6% and the previous month’s reading of 4.9%. This underscored the urgent need for the European Central Bank’s 442 billion euro liquidity injection, announced last week, to take effect soon.
  
• Poor US consumer confidence index data released mid-afternoon also hit risk appetite in the market, showing a drop in June to 49.3 from a downwardly revised 54.8 in May. This prompted investors to buy back into the perceived safety of the greenback.
  
• In trading so far today the single currency has risen slightly against the greenback, as traders continue to pick over yesterday’s economic releases.
  
• There are no major announcements due in the eurozone today, whilst in the US ADP Non-Farm Employment Change figures are out at 13.15 BST, followed by ISM Manufacturing PMI and Pending Home Sales at 15.00 BST.

Pound falls sharply vs. aussie after GDP data

The pound fell sharply against the Australian dollar yesterday after the release of worse-than-expected revised GDP figures from the UK.

• The pound began weakening prior to the release of the GDP data, as falling equities dragged sterling lower.
  
• Sterling’s losses were exacerbated by the GDP figures, which revealed that Britain's economy contracted more sharply than previously estimated in the first quarter, with gross domestic product showing a quarterly decline of 2.4% compared with the previous estimate of a 1.9% decline.
  
• Sterling continued to lose ground against the Australian dollar overnight, after the aussie got a boost from the release of Australian retail sales figures, which rose for the third consecutive month in May.

Sterling rises against kiwi after RBNZ's plans

Sterling experienced choppy trading against the New Zealand dollar yesterday.

• The pound rose against the kiwi dollar in the early morning, after the Reserve Bank of New Zealand announced details of new liquidity requirements for domestic banks, which may increase the cost of lending by 10 to 20 basis points.
  
• However, sterling began to weaken before the release of revised British GDP figures, and continued to fall after the figures revealed that the British economy contracted more sharply than previously estimated, with GDP showing a quarterly decline of 2.4% compared with the previous estimate of a 1.9% decline.

Sterling finishes marginally up against euro

The pound strengthened by 0.08 cents (0.07%) against the euro yesterday to close the day at 1.1761.

• In early trading yesterday sterling strengthened against the euro, after the Confederation of British Industry reported that the UK’s financial service companies were more optimistic now than at any point in the last two years.
  
• Elsewhere, a report released by property intelligence company, Hometrack, which showed the annual fall in house prices in England and Wales slowed for the third consecutive month in June, also helped the pound’s cause.
  
• Finally, strong London equities drove sterling’s gains yesterday. The FTSE 100 eventually finished up 53.02 (1.25%).
  
• In trading so far today the pound has risen sharply against the euro as improved sentiment towards the UK economy continues.
  
• There are no major announcements due in the eurozone today, whilst in the UK revised first-quarter GDP and current account figures are out at 09.30 BST.