Pound ends an important week in a strong position

The Pound is finishing the week on strong ground following renewed investor confidence in Sterling over the past four days since Tuesday’s budget. G20 leaders are meeting this weekend and the outcomes of this meeting will be important to the currency markets at the start of next week. Speak with your broker today to discuss any upcoming transfers and how to take advantage of movements in the market.

Pound Sterling – UK Markets

The Pound has maintained its gains in a week that has cast renewed optimism on the state of the UK recovery. The positive reaction to Tuesday’s budget and suggestions from the Bank of England minutes that an interest rate increase was favoured by one member of the committee have encouraged investment in Sterling. Morgan Stanley has now raised their 2010 and 2011 forecasts for the Pound against the Dollar and the Euro on the basis that they expect U.K. inflation to accelerate. Since the general election that bought in the new coalition Government, the Pound has gained 3.8 percent against the Euro and 1.1 percent against the Dollar and the past week has brought added confidence. Whether this will be long lasting will depend on broader market themes and the situation in Europe as well as whether the coalition continue to be united in their backing of the budget policies as there has been the first leak of some dissatisfaction from Liberal Democrat quarters on pension changes today.

US Dollar – US Markets

Yesterday’s jobless data and downbeat forecasts from retailers are weighing on the U.S. Dollar. Today sees another large U.S data release for annualised gross domestic product and purchases price index, consumption expenditures and consumer sentiment index. This may cause some movement ahead of the G20 meeting this weekend.

Euro – European Markets

The Euro and the US Dollar have had volatile movements overnight as European countries such as Germany continue to plan out austerity measures to curb the crisis whilst the US are focusing on growth. The Euro is loosing ground against the Pound and some economists are expecting that it fall to a nineteen month low.

Other Currencies – Highlights

G20 leaders are meeting in Toronto this weekend to discuss how to spur global growth and deal with the crisis in Europe. China have set the Yuan’s daily reference rate at a record high today boosting the Yuan, and signaling to others ahead of the G20 meeting that they will be honouring their pledge to start to move away from their currency policy of having the Yuan pegged to the Dollar. Other nations have been pushing for China to change its currency policy to help re-balance the world economy.