Sterling crept up against a broadly weaker euro this morning and steadied against the dollar to recover from yesterday’s fall following GDP figures. Disappointing data showed that the British economy barely made it out of recession with growth of 0.1%, against a 0.4% forecast. Meanwhile the dollar has risen slightly against major rivals ahead of the outcome of the US Federal Reserve's first policy meeting of the year.
Pound Sterling – UK Markets
The pound is profiting from the euro’s misfortunes as the single currency continues to suffer due to financial concerns for a number of Euro-Zone countries. However, sentiment towards the pound remains gloomy after yesterday’s figures showed that the British economy grew much less than expected late last year.
Analysts said that a significant recovery was potentially still a long way off, and that interest rates would stay at record low levels for months to come, limiting any upside in sterling. GBP/EUR is currently trading at 1.1516 and GBP/USD at 1.6211 at time of writing.
US Dollar – US Markets
The American economy picked up a little prior to the Federal Open Market Committee's Federal Funds Rate statement due later at 19:15 GMT. At 0933 GMT the dollar sat at USD/GBP 0.619, but has since tailed off. USD/EUR remains steady at 0.710.
This evening’s statement is just one of a number of significant reports today. With impacting housing data due at 15:00 GMT, there is a possibility of a build-up towards USD strength if the New Home Sales report can provide positive news for the US economy.
Euro – European Markets
The euro has traded down against most of its counterparts following the dollar's surge in yesterday's trading and continued anxiety over the fiscal health of countries in the Euro-Zone.
At 0839 GMT, the euro had slipped 0.2% to 86.99 pence. A fall under 86.50 pence would mark the single currency's weakest level since August.
By 0950 GMT the euro traded at 1.407 against the dollar and 126.138 versus the yen. The European economy may take a back seat in today's trading with larger spells of economic news releases coming from the UK and the United States.
Other Currencies – Highlights
In early trading the yen rose to a nine-month high against the euro and strengthened versus the dollar as speculation the global economic recovery is slowing spurred demand for Japan’s currency.
Elsewhere, the Australian dollar rose from near a one-month low against the greenback after a government report showed consumer prices rose higher than previously forecast, giving the central bank more reason to raise interest rates next week.