The pound dipped against the dollar this morning whilst problems in the Euro-Zone continue to weigh on the single currency.
Pound Sterling – UK Markets
Sterling dropped against the dollar this morning, staying close to a nine-month low against the US currency and hitting a six-week low against a number of other currencies on concerns over a weak economy and high levels of UK debt. Not a great amount of data this week, but most in the market expect dark clouds to hang over sterling, which has fallen more than 10 cents against the dollar since mid-January.
Sentiment was knocked further by renewed concerns that an election due by June will result in a stalemate after the latest opinion poll showed the Conservatives' lead shrinking.
At 0944 GMT the pound traded 1.5456 against the dollar and 1.1348 versus the euro. Sterling is expected to continue to remain under pressure over the coming days as it suffers from sovereign debt concerns of its own, with 10 year gilt yields at their highest levels since November 2008.
US Dollar – US Markets
The dollar dropped against higher-yielding currencies in earlier trading on speculation a stagnant US job market will keep Federal Reserve Chairman Ben S. Bernanke from raising the central bank’s key interest rate. At 0947 GMT the greenback touched 0.7342 against the euro and 91.600 to the yen.
A few interesting economic publications are expected from the States this week. The most impacting news events look to be the Consumer Confidence, the New Home Sales, the Durable Goods Orders indices and the Preliminary Gross Domestic Product. If the US economy continues to provide positive data, the dollar is likely to continue to strengthen against the majors.
Euro – European Markets
The sovereign debt problems of the peripheral European economies will continue to weigh on the euro, even though the Greek prime minister stated that his country was ahead of schedule on its budget cutting plans, and won't need a bail-out.
Even if that were true the Euro-Zones problems will prevent European rates moving anywhere in the short term. This fact is expected to weigh against the single currency and boost the dollar over the coming weeks and months.
At 0950 GMT the euro was at 0.8811 to the pound and 1.3619 against the US dollar.
Other Currencies – Highlights
In early trading, Australia’s dollar rose 0.3% to 82.51 yen after touching 82.82 yen, it’s highest peak since Jan 21st. New Zealand’s dollar also strengthened to 64.32 yen from 64.01 yen and rose against the greenback to fetch 70.22 US cents.
Sterling Rises on Hopes of EU Softening Tone on Backstop