European stocks boosted the pound vs kiwi yesterday

The pound managed to recover nearly a cent, 0.4%, against the New Zealand dollar yesterday as investment demand returned to the UK currency.

• Data showed that in July, production rose by 0.9%, which fuelled a wave of optimism about UK economic recovery.
  
• Bolstering the optimism was a forecast from the National Institute of Economic and Social Research which estimated that GDP rose in the third quarter by 0.2%, which, if correct, would suggest that the UK is out of recession.
  
• Sterling also received a boost from European stocks which continued their strong run.
  
• Trading this morning has seen the pound make further inroads into last week’s losses against the kiwi, currently up around 0.4%.
  
• The current strength of the kiwi will have investors around the world focused on the rate decision and corresponding statement released by the Reserve Bank of New Zealand at 22:00BST today, which could have a significant impact on the currency.

Sterling reversed slide against aussie, as UK economic recovery hopes were renewed

The pound capped its four-day slide against the aussie yesterday, buoyed by renewed support for the UK’s economic recovery.

• Following from positive services figures last week, the UK economy was given another boost as a manufacturing production reading came in higher-than-expected at 0.9%.
  
• Additionally, European stocks also continued to show strength, with the FTSE100 briefly pushing past 4950, which supported sterling’s rally.
  
• In Australia, figures yesterday showed that business confidence hit a 6-year high in August, adding to mounting speculation that local rates could rise in coming months.
  
• However, this data, which drove the aussie forward against the dollar, was unable to impact on sterling which repealed some of its recent losses to trade up 0.2%.
  
• The Australian economy suffered a setback this morning as retail figures for July were down on the previous month, which has put pressure on the aussie, allowing sterling to rise 0.5% in trading so far today.

Selling pressure was mounted on the dolla yesterday, with gold reaching $1000

The euro rallied strongly against a broadly weakened dollar yesterday, briefly reaching a yearly high of 1.4523 at 15:30BST before closing at 1.4474.

• The single currency gained almost exactly 1.00% yesterday, as rising risk sentiment, supported by strong equity markets, continued to put selling pressure on the greenback.
  
• The dollar suffered from a rise in gold prices, which reached its highest level since March 2008, as well as fresh concerns over its status as a reserve currency, with analysts suggesting that dollar selling pressure could continue over the short term as risk sentiment strengthens.
  
• The single currency was given further strength in the afternoon as the US markets opened up positive, encouraging investors to sell the safer currency.
  
• In trading this morning, the euro has continued to trade near its 2009 high, as investors continue to sell the low-yielding dollar in favour of riskier assets.
  
• Investors will be listening to the words of the Chicago Fed President, who speaks today at 13:00BST, for clues to the pace of US economic recovery, whilst in the eurozone, there are no major announcements.

The pound posted strong gains against the US dollar yesterday as risk aversion eased

The pound reached a two-week high against the dollar yesterday, building on gains made last week, to close the day up 0.8% at $1.6486.

• The pound made strong gains against the greenback yesterday, finding support from stock markets which rose on speculation that the global recession is easing, sapping demand for the currency haven.
  
• Sterling found further support from July’s manufacturing production figure, which at 0.9% was a good improvement from the 0.4% reading in June and helped to bolster demand for the currency.
  
• Additionally, traders cited gold’s rally above $1000 per ounce as a source of broad downward pressure on the US currency.
  
• These cumulative effects allowed the pound to briefly climb over two cents, to a high of 1.6558, as investors bought back in to the UK recovery.
  
• The pound has continued to rally again this morning, breaking above the 1.6500 resistance level, as risk sentiment remains high.

Early gains for the pound vs euro yesterday were lost as equities receeded from their highs

Having made early gains against the single currency, the pound stumbled in later trading, to close the day marginally below the 1.14 level.

• Sterling initially reversed Monday’s losses, recovering to 1.1451 as data revealed that manufacturing output rose at its fastest rate in one and a half years in July, which encouraged investment demand.
  
• The improved reading of 0.9%, which was three times what had been forecast, was helped largely by a sharp rise in car production which rose by 10.4% in July from June.
  
• The figures suggest that the UK economy has made a stronger start to the third quarter and may be on track to emerge from recession sooner than previously predicted.
  
• However, in the afternoon the pound was unable to capitalize on its early gains as the rally in equities appeared to favour euro investment, allowing the single currency to regain its value.
  
• Trading this morning has seen the pound edge lower as the European stock markets start trading in the red.
  
• The pound may be able to hold its value today if UK trade balance figures, released at 09:30BST, follow forecasts and show improvement in July.

The kiwi has relinquished gains made yesterday, as confidence in the pound returns

A strong rise in risk sentiment saw the pound fall further against the New Zealand dollar yesterday, to close at 2.3592, down 1.0%.

• Sterling traded around the lows it hit a couple of weeks ago as rallying equity markets eased risk aversion and spurred demand for higher-yielding currencies.
  
• Commodity driven currencies were the real winners yesterday, as investors relinquished haven positions in search of a greater yield.
  
• Confidence in the New Zealand currency also remained high as investors speculate on an upbeat statement from the RBNZ later this week, whilst speculators remained wary of a possible dovish statement from the BofE on Thursday.
  
• The recent rise for the kiwi has actually become an issue for Governor Alan Bollard, who has expressed his discomfort with its surge stating that the high rate may hamper New Zealand’s export led recovery.

The pound has reversed its downward trend against the aussie today on rising European equities

The pound fell for a fourth consecutive day against the aussie yesterday, driven by a broad rise in risk sentiment.

• The Australian dollar hit its strongest level in thirteen years against the pound yesterday as improved investor sentiment was sparked by reassurances from the G20, who pledged to continue with policies aimed at supporting the global economy following a meeting in London over the weekend.
  
• Although there was not a big market reaction to the G20 meeting, part caused by the US Labor Day holiday, the outcome was certainly pro-risk appetite, which strengthened demand for the Australian currency, driving the pound down 1.9098, a 0.9% dip.
  
• The aussie was given an additional lift by the first rise in Australian job advertisements in 16 months, which increased speculation that the Reserve Bank of Australia may raise rates before the end of the year.
  
• In trading so far this morning, the aussie has pared its gains as investor appetite towards riskier assets was tamed as Asian stocks traded in the red.

The single currency as surpassed its previous monthly high today against a broadly weaker dollar

The single currency continued to gain ground against the dollar yesterday, spurred on by a rise in European equities.

• The single currency found support against a broader weaker dollar yesterday as bullish European stocks eased risk aversion, weakening haven currencies.
  
• The single currency also made ground, as German factory orders revealed a further rise in the strength of their manufacturing industry.
  
• Data showed that factory orders rose a stronger-than-expected 3.5% in July, but the reaction was relatively subdued with the euro trading steadily up around 0.3%.
  
• In trading this morning, the euro is continuing to consolidate its gains, nearing the highs of 1.44 it achieved at the end of August.
  
• German monthly production figures are released today at 11:00BST, which are predicted to follow yesterday’s data in supporting Germany’s recovery, whilst in the US there are no major announcements.

Sterling has reversed yesterday's losses against the dollar, gaining a cent in trading this morning

On the Labor Day holiday, the pound fell back to $1.6347 against the greenback despite a general rise in risk sentiment.

• The pound initially edged up further against the dollar yesterday as risk sentiment was supported by gains in the European equity markets.
  
• The G20 ministers over the weekend pledged to maintain monetary stimulus which, although this came as no surprise, it was nonetheless supportive of risk and generated a rally in the European equity markets.
  
• Gains were short-lived, however, as speculation of further easing by the Bank of England later this week prevented the pound capitalising on the rise in risk sentiment.
  
• Analysts noted that trading was choppy yesterday due to merger and acquisition speculation after Cadbury rejected a £10.2 billion take-over bid by US conglomerate Kraft Foods.
  
• Sterling however has reversed its losses this morning, already creeping up near the 1.64 level, as investors speculate on positive British manufacturing production data released today at 09:30BST.

Expectations of further monetary easing kept the pound low agains the euro yesterday

Investors were cautious of taking sterling positions yesterday, with the pound losing 0.5% against the single currency to close at 1.1404.

• Sterling relinquished its recent gains against the euro yesterday as speculation of further easing by the Bank of England later this week overshadowed the market.
  
• Analysts have noted that policy expectations will be the main driver of sterling this week, with the majority of forecasters expecting the rate to hold steady at a record low of 0.5%.
  
• The single currency was also assisted by a stronger-than-forecast factory orders figure in Germany which reaffirmed the strength of the manufacturing sector’s recovery in the eurozone’s largest economy.
  
• In trading this morning, the pound has started to curb its losses, edging marginally lower, but holding around the 1.14 level.
  
• In the UK today, production data is being released at 09:30BST, with analysts forecasting a rise of 0.3% in July, a reduced figure from the previous month.