Pound hits one month low against the euro

Sterling hit a one month low against the single currency yesterday, finishing the day 0.55 cents lower – the third consecutive day of losses for the pound.

• Sterling was on the back foot early in London trading following manufacturing output falling by 0.5% in May – analysts were suggesting that the sector would actually grow by 0.2% during the month.
  
• The National Institute of Economic and Social Research also stated that GDP during the second quarter has contracted by 0.4%, dashing hopes that the UK may have escaped the recession.
  
• Yesterday’s gains for the single currency were extended after figures showed German factory orders unexpectedly jumped to 4.4 percent, contrasting sharply with the weak UK data.
  
• The weak economic data emanating from the UK has raised the prospect that the Bank of England will expand its quantitative easing programme at its latest policy meeting tomorrow. Interest rates are expected to stay on hold at 0.5%.
  
• Halifax release their house price survey today within the UK, whilst the EU release their revised first quarter GDP figures. Germany will reveal their industrial production figures later in the morning giving an insight into how the sector is faring at present.

Pound loses further ground to the US dollar

The pound lost further ground to the US dollar yesterday, falling by 0.91% to close the day at 1.6137.

• Concerns over the health of the British economy were fanned yesterday after the announcement of worse than expected industrial production data saw risk aversion spread and the pound heavily sold. Manufacturing output fell by 0.5% in May and the wider measure of Industrial Production contracted 0.6%, which surprised investors who were expecting both measures to grow by 0.2%.
  
• This news damaged hopes that the UK economy would bounce back in the second quarter after contracting at the fastest rate for 50 years in the first 3 months of this year. Indeed, the National Institute of Economic and Social Research announced that the UK economy shrank by 0.4% in the second quarter and admitted that they no longer believe that the recession reached bottom in March.
  
• The pound has continued to slide in this morning’s trading ahead of tomorrow’s Bank of England interest rate policy meeting, where many investors now believe that the BoE will expand their quantitative easing programme in a bid to encourage economic growth.
  
• In today’s trading Halifax House Price data is announced in the UK this morning, whilst in the US MBA mortgage applications, EIA crude oil stocks change and consumer credit figures are announced.

Euro weakens against US dollar on growing risk aversion

The euro weakened against the dollar by 0.60 cents yesterday, finishing the day at $1.3923.

• The euro was briefly boosted yesterday after data showed that German factory orders recorded their largest jump in two years . Orders rose 4.4 per cent in May, much better than the 0.5 per cent increase forecast.
  
• However, worries over the deepening recession resulted in risk aversion and prompted investors to buy into the safe-haven dollar, undermining demand for the euro and allow the dollar to finish up on the day.
  
• The euro weakened further against the dollar overnight as investors continue to fret that optimism about a global economic recovery has been overdone.
  
• Investors are awaiting comments on the dollar's role as the world's reserve currency before a three-day meeting of leaders of the Group of Eight industrial nations and leading developing nations in Italy that starts later on Wednesday.
  GDP figures are due to be released in the eurozone this morning as well as industrial production in Germany. In the US, MBA Mortgage Applications and EIA Crude Oil Stocks change will be announced this afternoon.

Pound trades mixed against New Zealand dollar

The pound lost ground to the New Zealand dollar yesterday morning, before recovering all its loses in the afternoon to close 0.33% up on the day at 2.5656.

• Sterling fell against most currencies, including the kiwi dollar, yesterday morning after weak British industrial production data fanned further doubts about a quick recovery for the UK economy.
  
• The figures showed British manufacturing output fell by 0.5 percent in May and industrial production shrank by 0.6 percent, against forecasts for a 0.2 percent rise in both measures.
  
• Sterling dipped to a 1-week low against the New Zealand dollar following the release, but recovered all its losses in the afternoon as investors began to shy away from higher yielding currencies.
  
• The pound held its gains overnight, as a gloomy outlook for the world economy was backed up by dismal private-sector orders for Japanese machinery, a key leading barometer of the state of Asian demand and the region's manufacturing sector. Orders unexpectedly fell to a record low in May, undermining demand for higher yielding currencies such as the New Zealand dollar.

Sterling trades mixed against the aussie dollar

The pound fell sharply against the Australian dollar yesterday morning, hitting a 3-week low before recovering in the afternoon to finish the day up.

• Sterling fell broadly yesterday morning after weak UK industrial production data fanned further doubts that the economy is poised for a quick recovery.
  The figures showed British manufacturing output fell by 0.5 percent in May, while industrial production shrank by 0.6 percent, in contrast to forecasts for a 0.2 percent rise in both measures.
  
• The pound sank to a 3-week low against the aussie dollar following the data, but recovered ground in the afternoon as investors sold the higher yielding aussie amid growing risk aversion.
  
• Sterling finished the day marginally up against the Australian currency at 2.0449, and has held its ground overnight as signs an economic recovery in Asia was struggling to gain traction deterred investors from buying riskier currencies.

Sterling loses further ground to the euro

The pound lost a further 0.32 cents against the single currency yesterday as European equity markets remained sluggish.

• Economic announcements were light on the ground in the UK, however traders remained concerned over hopes of an economic recovery as they continued to sell off the pound.
  
• The FTSE 100 had a tough day as it slipped below the 4,200 mark as oil, mining, and the banking sectors all came under selling pressure.
  News out of the eurozone was little better, as the Sentix Investor Confidence survey was released much worse than anticipated.
  
• In early trading today, the pound is continuing to trade within yesterday’s ranges as investors remain cautious.
  
• The market will take note from industrial and manufacturing production surveys released in the UK this morning, whilst within Germany, factory orders data is released.

Sterling hits 1-month low against the US dollar

The pound fell against the US dollar yesterday, hitting a one month low as concerns about the UK economy and expectations that the Bank of England would increase its quantitative easing programme saw the pound heavily sold off.

• Lingering concerns about the global economy, fed by Thursday’s poor US payrolls figures, saw risk appetite suffer and caution surfaced ahead of this Thursday’s Bank of England meeting.
  
• Falling equity prices also undermined the pound’s position yesterday.
  
• Today sees a barrage of economic data released. In the UK, industrial and manufacturing production data is announced this morning and BRC Shop Price Index, Nationwide Consumer Confidence and NIESR GDP Estimate figures are released later in the day.
  
• In the US, API Crude Oil Inventories and ABC/Washington Post Consumer Confidence data will be announced this evening.

Euro makes small gains against the US dollar

The euro strengthened against the US dollar by 0.30 cents on Monday, to finish the day at $1.3981.

• Weak eurozone retail data and a grim US jobs report released last week reaffirmed fears over the recovery of the global economy, which in turn increased risk aversion as it pointed to the view that investors have been far too optimistic regarding recovery prospects.
  
• However, despite this increased risk aversion the dollar’s gains were limited yesterday due to speculation that its status as the global reserve currency may be discussed at the G8 meeting in Italy. There have been reports that China is keen to discuss a new global reserve currency, however the vice minister said in Rome on Sunday that the dollar would be the most important international reserve currency for years, according to China's official Xinhua news agency.
  
• The dollar strengthened against the euro this morning in anticipation of the Group of Eight (G-8) meeting due to take place this week. In Asia on Monday, the dollar was mixed against other major currencies as investor caution grew ahead of a summit of the Group of Eight (G-8) economic powers this week.

Sterling falls sharply against kiwi dollar

The pound fell sharply against the New Zealand dollar yesterday, losing 1.38% to finish the day at 2.5572.

• Sterling fell sharply against the kiwi dollar in the early morning yesterday, as investors continued to sell off the British currency on growing risk aversion.
  
• The pound levelled off in the afternoon, before resuming its fall overnight amid speculation that the Bank of England plans further quantitative easing.
  
• The kiwi dollar also got a boost this morning from better than expected business confidence figures for the second quarter, suggesting the economy may pull itself out of recession by the end of the year.

Pound weakens against the Australian dollar

Sterling lost further ground to the Australian dollar yesterday, falling by 0.33% to close the day at 2.0421.

• In a volatile day’s trading yesterday, the pound weakened against the Australian dollar in the morning as investors continued to sell off the British currency.
  
• However, sterling was temporarily dragged up in the afternoon following a small rally on the FTSE, although the pound’s gains were given back in the evening after London equities still finished down on the day.
  
• The pound lost further ground to the Australian dollar early this morning, after the Reserve Bank of Australia kept interest rates on hold at 3%.
  
• The pound has continued to lose ground to the Australian dollar this morning on speculation that the Bank of England plans further action to boost the economy, and as forecasts for weakening company earnings hurts stocks.