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.

Pound strengthens against euro

In response to the Bank of England’s decision to cut interest rates by 0.5% to a new historic low of 1% yesterday, the pound has regained value against the single currency as markets reacted positively to the move. The European Central Bank also acted as expected and kept interest rates on hold at 2%. Housing numbers from the Halifax house price index also surprised to the upside earlier on Thursday, with a rise in prices of 1.9 percent in January, with many anticipating they would have fallen further. In early trading today the pound has risen further against the euro, hitting a 2 month high as investors hold on to the belief that the UK’s interest rates may be nearing the bottom, whereas the eurozone has much further to fall. It must be noted, however, that an underlying nervousness still remains over the state of the UK’s economy and how deep a recession we may be facing.

Germany release their industrial production figures this morning, whilst within the UK, industrial and manufacturing data is released.

Sterling strengthens against the US dollar

The pound strengthened against most of the major currencies yesterday following the Bank of England’s decision to cut interest rates by 50 basis points to 1%. Usually currency weakens on the back of interest rate cuts, however the opposite has occurred on this occasion as investors’ believe it points to a positive economic stimulus.

The pound reached a two-week high against the dollar, although experts believe this will be short lived with many predicting losses versus the greenback over the next few months. It hit a 23-year low just last month.

There are several significant announcements taking place in the US today including Nonfarm Payrolls, Average Hourly Earnings, Average Weekly Hours and Unemployment Rate at 13.30 GMT. In the UK, Industrial Production and Manufacturing Production data will be released at 09.30 GMT.

Dollar strengthens over the euro

The dollar strengthened over the euro by 0.59 cents yesterday to close the day at 1.2791, after rumors that the Securities and Exchange Commission is going to relax some accounting rules saw US stocks rally. This had the effect of improving risk appetite in the foreign exchange markets and saw the euro come off its earlier low of 1.2765, which it had been pushed to after lingering pressure from the downgrading of Russia's sovereign debt.

In today's trading there has been little change as investors wait for the announcement of a barrage of important US employment data. Announced at 13.30 GMT, Average Hourly Earnings, Non-farm Payrolls and Unemployment Rate figures will give a clear indication of the health of the US employment market and some investors speculate that we will notice a slowing in the rate of contraction. In the eurozone German Industrial Production data is announced this morning.

Australian dollar eases off slightly against sterling

The Australian dollar eased off slightly against sterling yesterday, as the BoE cut rates by 50 basis points, to a record low of 1 percent. The decision generally met market expectations but investors continue to remain nervous over the economy and the state of its financial system. Analysts are now pricing in a further rate cut from the BoE in March. However monetary easing, as a tool to stimulate the economy, will have less effect the closer rates head toward zero. Investors therefore continue to remain alert to possible alternative measures being used such as quantitative easing. This would involve flooding the banking system with money to keep official rates low and help shore up the financial systems.

New Zealand dollar remains range-bound

The New Zealand dollar remained largely range bound yesterday, gaining some support from jobs data. The jobless rate rose to 4.6 percent in the fourth quarter, however 21,000 jobs were added in the same period. The numbers backed a case for the central bank to cut rates by smaller increments rather than larger ones. The kiwi was also aided by an improvement in investor risk appetite.