Sterling up against euro on data-less Friday

Sterling strengthened by 0.52 cents (0.44%) against the euro on Friday, closing the day at 1.1753.

• In early trading on Friday sterling strengthened against the euro as traders took their lead from strong London equities.
  
• With little data out, Friday also gave investors the chance to reflect on some important economic announcements out earlier in the week. Bank of England Governor Mervyn King’s cautionary comments on Wednesday dampened demand for sterling, however the European Central Bank’s one-year refinancing plan announced the same day also caused jitters in the market.
  
• This resulted in a volatile day’s trading, with the pound eventually heading higher as traders reassessed their views from earlier in the week.
  
• In trading so far today the pound is down very slightly against the single currency as investors look ahead to this week’s important announcements, including the European Central Bank’s interest rate decision on Thursday.
  
• There are no major announcements due in the UK or eurozone today.

Pound up over 1.5 cents vs. US dollar

The pound rose sharply against the US dollar on Friday, finishing the day up 1.54 cents (0.94%) at $1.6523.

• In early trading on Friday the dollar weakened against sterling, during a day light on data. Strong London equities helped the pound’s cause early on, as did investor reaction to the US Fed’s monetary policy announcement late on Wednesday.
  
• The Fed’s clear hint that there would be no interest rate rises for the rest of this year spurred demand for higher-risk currencies like the pound on Friday, as investors looked beyond the US for assets which could offer better returns.
  
• However, gloomy growth forecasts released by the OECD earlier in the week, as well as Mervyn King’s downbeat testimony last Wednesday, capped sterling’s gains.
  
• In trading so far today the pound has fallen against the greenback, despite a CBI survey released this morning suggesting the UK financial sector is more upbeat now than at any time in the last two years.
  
• There are no major announcements due in the UK or US today.

Euro finishes up over $1.40

The euro rose against the US dollar for the second day in a row on Friday, closing up 0.69 cents (0.49%) at $1.4055.

• In early trading on Friday the euro strengthened against the dollar, after strong gains on European equities improved investor risk appetite.
  
• In addition, the US Fed’s clear indication on Wednesday that interest rates would not increase for the rest of this year prompted investors to look elsewhere for higher-yielding assets. There had been some talk in the market before their latest meeting that a rate rise may be on the cards following some positive data, however the Fed’s cautionary announcement dampened these hopes, weakening the dollar as a result.
  
• In trading so far today the euro has dipped against the greenback as investors look ahead to some important economic announcements out this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie ends 3-day rally vs. sterling

The aussie fell against the pound on Friday, ending a three-day rally as limited data and falls on global equity markets reduced investor appetite for riskier currencies.

• With little data out, Friday gave traders a chance to reassess last week’s economic releases. Bank of England Governor Mervyn King’s gloomy testimony on Wednesday contributed to sterling’s falls mid-week, however there was a feeling on Friday that the UK currency may have been oversold, helping it gain ground.
  
• There are no major announcements due in the UK or Australia today, so traders will take their lead from equities and broader market movements.

Kiwi weakens after weak GDP data

The kiwi weakened against sterling on Friday after disappointing New Zealand first-quarter GDP data hit demand for the South Pacific nation’s currency.

• The news that New Zealand’s economy had shrank by 1.0% in the last quarter was poorly taken by the markets, as they were expecting a 0.7% contraction. This fuelled speculation that the Reserve Bank of New Zealand may have to cut interest rates further.
  
• There are no major announcements due in the UK or New Zealand today, so investors will likely take their direction from broader market movements.

Pound weakens after King's comments

The pound weakened by 0.76 cents (0.65%) against the euro yesterday to close the day at 1.1701.

• In early trading yesterday sterling weakened against the euro after London equity markets turned lower initially.
  
• Bank of England Governor Mervyn King’s dovish assessment on Wednesday also pushed sterling lower mid-morning, after he said the UK’s economic recovery could still be a ‘long, hard slog’ despite more encouraging data recently. This led investors to believe the central bank had no intention of tightening its policy anytime soon.
  
• In addition, the Organisation for Economic Cooperation and Development’s bleak prediction the day before that Britain’s economy would contract 4.3% this year and stagnate in 2010 kept up the downward pressure on sterling.
  
• In trading so far today the pound has dipped slightly lower against the euro as investors continue to digest some important announcements out this week.
  
• There are no major announcements due in the UK or eurozone today.

Sterling weakens after key announcments

Sterling weakened by 0.35 cents (0.21%) against the US dollar yesterday, finishing the day at $1.6369.

• In early trading yesterday the pound weakened against the dollar after the US Fed’s monetary policy decision the day before was generally viewed positively by the markets. Its decision not to expand its asset purchase program was taken as a sign the deep US recession was easing. However, its clear indication that interest rates would stay low for some time dampened expectations of early rate rises, capping the greenback’s gains to some extent.
  
• Also weighing on the pound were Mervyn King’s cautionary comments on Wednesday which, together with a gloomy OECD report about Britain’s growth prospects, reduced investor appetite for sterling-denominated assets.
  
• The dollar received an added boost mid-afternoon after a government report showed the number of US workers filing new claims for jobless benefits unexpectedly rose last week. This prompted several investors to buy into the perceived safe-haven of the greenback.
  
• In trading so far today the pound has risen slightly against the greenback, as investors continue to digest this week’s economic releases.
  
• There are no major announcements due in the UK or US today.

Volatile day ends with euro up

The euro strengthened by 0.59 cents (0.42%) against the dollar yesterday to finish the day at $1.3986.

• In a choppy day’s trading yesterday the euro first weakened then strengthened against the dollar, as investors digested Wednesday’s major announcements.
  
• The European Central Bank’s 442 billion euro injection of one-year funds into money markets on Wednesday received a mixed reaction yesterday, after a record 1,121 banks took up their offer.
  
• Similarly, the US Fed’s decision to leave interest rates on hold and not extend their quantitative easing program produced equal uncertainty in the market. Some took their decision to ‘wait-and-see’ as a positive sign the recession was easing, whereas others were disappointed that the bank effectively ruled out interest rate rises for the rest of this year.
  
• These differing viewpoints resulted in a volatile day’s trading, with both currencies swinging into positive and negative territory. The dollar’s cause was helped mid-afternoon, however, after worse-than-forecast US jobless data reduced investor’s appetite for risk. Nevertheless, the euro finished the day slightly up.
  
• In trading so far today the euro has once again broken through the $1.40 barrier, as investors continue to pick over this week’s economic announcements.
  
• There are no major announcements due in the US or eurozone today.

Aussie strengthens vs. pound for third straight day

The aussie strengthened against the pound for the third straight day yesterday, after gains on Asian stock markets and rises in the price of oil and gold buoyed demand for higher-risk currencies.

• Rises in the price of gold and oil, Australia’s third- and fourth-most valuable commodity exports respectively, drove the aussie’s gains yesterday.
  
• In addition, dovish comments from the Bank of England Governor Mervyn King on Wednesday, together with a gloomy report from the OECD the same day, downgrading the UK’s growth prospects, hit the pound.
  
• There are no major announcements due in either Australia or the UK today so traders will take their lead from broader market movements.

Kiwi strengthens despite poor GDP figure

The kiwi again strengthened against sterling yesterday, despite worse-than-expected New Zealand first-quarter GDP figures overnight.

• New Zealand’s statistics bureau reported a fall in GDP by 1% last quarter, far worse than the 0.7% analysts had been expecting. This stirred speculation the Reserve Bank of New Zealand may cut interest rates further from a record low of 2.5%.
  
• Nevertheless, the kiwi strengthened after gains on Asian stock markets overnight which, together with downbeat comments from Bank of England policymakers, made the kiwi more attractive to investors than sterling.
  
• There are no major announcements due in either the UK or New Zealand today, with today’s trading likely to be dictated by reaction to last night’s New Zealand GDP figure.