Pound Recovers vs Dollar, Euro
Pound Sterling - UK Markets
The Pound was oblivious to the latest range of negative data yesterday, gaining 0.23% against the US Dollar to 1.7658 and up against the Euro to 1.2463.
Sterling has been enjoying a “bounce” in the markets, reaching a two week high against the Euro despite still being swamped with negative data. News yesterday showed British manufacturing and industrial production continues to fall, by 0.2% in July, pushing the annual rate to -1.4%. The economic slowdown in Europe, as the UK's largest export market is affecting the demand for British goods. Balance of Trade figures due this morning will shed more light on the situation.
US Dollar - US Markets
The Dollar remained steady yesterday, posting small declines against the Euro and the Pound.
Bloomberg economists predict US spending to stall this quarter as job cuts take their toll on the resilient US economy. Personal spending, the largest sector of the economy, is taking a hit as consumers in the US face the same squeeze as here in the UK - restricted credit, high inflation, low wage growth and high unemployment.
The price of oil fell yesterday to below $100 a barrel from $147 in July as economic slowdown reduces demand for the commodity. OPEC promptly announced an unexpected cut in production over the next month, causing prices to spike, but they had eased again by close yesterday.
Euro - European Markets
The Euro continues to decline against the Pound, down to 0.8018 this morning, but has posted gains against the US Dollar, currently trading at 1.4162.
ECB President Trichet is making a speech this morning regarding the state of the European economy which could have significant ramifications for the value of the Euro.
Australian Dollar Low
The Australian Dollar closed at a one year low against the US, for the second day in a row yesterday. The Australian currency is as its weakest since August 2007, in the early days of the credit crunch. The New Zealand Dollar is also hovering above 2 year lows and the Reserve Bank of New Zealand meets tomorrow to decide on interest rates.
The Yen made gains yesterday as risk appetite took a hit following news that Lehman Brothers, the fourth largest securities firm in the US and Korea Development Bank had failed to negotiate a deal.