Sterling breaks through 1.17 level vs. EUR

The pound continued its rise against the euro yesterday, strengthening 0.6 cents (0.51%) to close the day at 1.1756.

• In early trading yesterday, sterling hit a year-high against the euro after a Bank of England/GfK NOP poll showed rising UK inflation expectations. Its rally was also aided by a NIESR report which showed the British economy grew 0.2% on the month in April and 0.1% in May.
  
• These announcements added to a string of fairly firm UK figures out over the past few days, which continued to boost the pound. In particular, better-than-expected industrial production data released on Wednesday lifted investor appetite for sterling.
  
• Finally, strong gains on London equity markets also contributed to sterling’s advances in late trading. The FTSE 100 eventually finished up 25.12 points (0.57%).
  
• So far today, the pound has dipped slightly against the euro as investors continue to digest the data released this week.
  
• There are no major announcements due in the UK or eurozone today.

Sterling closes at a six-month high against US Dollar

Sterling rose sharply against the US dollar yesterday to close at a six-month high. It finished at 1.6589, up 2.33 cents (1.42%) on the day.

• In early trading yesterday, sterling resumed its rise against the greenback as risk appetite continued to improve following solid gains on stocks and oil prices. The FTSE 100 eventually finished the day up 25.12 points (0.57%).
  
• Two polls showing rising UK inflation expectations and possible economic growth in April also aided the pound’s gains mid-morning. These surveys were just the latest in a string of more positive data out recently which have bolstered the view that the UK economy may be recovering.
  
• In trading so far today, sterling has pared some of the gains it made yesterday as investors continue to assess the data out this week.
  
• There are no major announcements due in the US or UK today.

Euro strongly over $1.41 vs. USD

The euro strengthened by 1.3 cents (0.93%) against the US dollar yesterday to finish the day at $1.4108.

• In early trading yesterday, the single currency strengthened against the dollar as investors looked more favourably upon higher-yielding currencies like the euro. Increasingly positive economic data recently has prompted investors to look beyond the perceived safe-haven of the greenback.
  
• Adding to the euro’s gains was the news a G8 source had told Reuters that the IMF had raised its 2010 global growth forecasts to 2.4% from April’s estimate of 1.9%. This bolstered demand for perceived riskier currencies like the euro.
  
• In trading so far today, the euro has dipped against the dollar as investors eye this weekend’s G8 meeting in Italy with interest.
  
• There are no major announcements due in the UK or eurozone today.

Aussie strengthens against pound on US data

The Australian dollar strengthened against the pound yesterday, after positive economic data was released in the US.

• The US data fuelled speculation that the economic deterioration in the world economy may be coming to an end. The news saw demand for risk appetite rise with commodity linked currencies, such as the Aussie, benefitting the most.
  
• Direction today will be largely driven by broader economic sentiment.

Kiwi shoots up on rate hold

The Kiwi strengthened by just under four cents against sterling yesterday, following the Reserve Bank of New Zealand’s decision to keep interest rates on hold this week at 2.5%.

• Much like the Aussie, the Kiwi benefitted from positive US data being released.
  
• The New Zealand dollar has also benefitted from better-than-expected retail sales data being released overnight.

Sterling hits year high against EUR

Sterling strengthened against the euro by 1.05 cents (0.91%) yesterday to close the day at a six-month high of 1.1696.

• In early trading yesterday the pound rose against the single currency as gains on London equities buoyed investor confidence in the UK’s economy. The FTSE 100 was up 1.6% in early trade.
  
• A greater-than-expected fall in French industrial output in April did little to ease the euro’s plight mid-morning, as it revealed a contraction of 1.4%, over the 0.2% predicted.
  
• Further aiding sterling’s gains were stronger-than-forecast UK manufacturing figures, which revealed 0.2% growth in the sector last month, versus the 0.1% contraction expected. Industrial production was also up 0.3% this month.
  
• In trading so far today the pound has resumed its rally against the single currency, breaking through the 1.17 level as investors continue to digest recent data releases.
  
• There are no major announcements due in the UK or eurozone today.

Sterling continues its rally vs. USD

Sterling continued its recent rally against the US dollar yesterday, rising by 0.51 cents (0.31%) to finish the day at $1.6356.

• In early trading yesterday the dollar fell against sterling, as global stock prices were lifted by improved risk appetite in the global economy. The greenback struggled as the market reassessed the chances of a US interest rate rise at the end of this year, following positive jobs data released last Friday.
  
• Sterling ’s rally was also helped by surprisingly positive UK manufacturing figures, which revealed a 0.2% growth in the sector last month. Industrial production rose 0.3% over the same period.
  
• However, a fall in the US Trade Balance to -$29.2 billion capped sterling’s gains to some extent as investors questioned the health of the world’s largest economy.
  
• However, the news that Russia’s central bank wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead maintained the general downward pressure on the dollar mid-afternoon. It is currently the fifth largest holder of US government debt, with roughly $404.2 billion foreign exchange reserves in Treasuries.
  
• In trading so far today, the pound has continued its rise against the greenback as improved risk appetite sweeps the market.
  
• There are no major announcements due in the UK today, whilst in the US Retail Sales data is due at 13.30 BST.

Euro weakens after automatic sell off orders kick in

The euro weakened 0.86 cents (0.61%) against the US dollar yesterday to close the day at $1.3978.

• In early trading yesterday the dollar dipped against the single currency, as the market questioned how likely a US interest rate cut is later this year. Following better-than-expected American jobs data on Friday speculation grew earlier this week that a cut may be on the cards, but investors began to question its likelihood yesterday.
  
• However, worse-than-expected US Trade Balance figures trimmed the euro’s gains in the early afternoon, after they revealed a fall to -$29.2 billion this month.
  
• News that Russia’s central bank, the fifth largest holder of US government debt, wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead initially boosted the euro. However, as it rose it triggered automatic sell orders, which pushed the single currency down 0.3% in late trading.
  
• In trading so far today the euro has headed back over $1.40, as investors continue to pour over recent economic data.
  
• There are no major announcements due in the eurozone today, whilst in the US Retail Sales data is out at 13.30 BST.

Aussie weakens on improved UK sentiment

The Australian dollar weakened slightly against sterling yesterday.

• The aussie’s losses against the pound came despite BoE policymaker, Kate Barker, suggesting that British interest rates were likely to remain low for an extended period of time.
  
• Sterling was boosted by industrial output figures yesterday, which rose unexpectedly in April.
  
• The rise was the first in over 12 months and provided further evidence that the UK economy could return to positive growth within the second or third quarter of this year.

Kiwi's rate hold helps NZD

The New Zealand dollar gained sharply against the aussie and sterling yesterday, as the Reserve Bank surprised some investors by keeping interest rates on hold at 2.5 percent.

• The pause in rates was the first since July of last year, and was designed to stimulate the economy which has been in recession since last year.
  
• However, no growth is expected until the end of 2009, so the RBNZ did leave the door open for further cuts after it has assessed the impact of its previous aggressive rate cutting.