It’s more of the same for the beleaguered Pound - which is unfortunate for those based in the UK who need to transfer Sterling into another currency. A number of reports are observing that markets are reacting less and less to economic data at present instead continuing with the same obsession about interest rates between the major economies. This is why yesterday’s lower UK inflation figure is such bad news for those hoping Sterling will strengthen against the Euro as it eases pressure on the Bank of England to raise rates. You can gain a no-obligation quote at any point from your broker or by registering an enquiry online.
Pound Sterling – UK Markets
Sterling has fallen by 0.46 percent on the US Dollar and 0.42 percent on the Euro following the lower than forecast 4 percent inflation figure yesterday morning as well as poor retail sales and house prices. The weak data alongside reduced inflationary pressure has suggested to markets that UK policy makers will be less inclined to make an interest rate hike soon.
There was however an improvement in UK net trade yesterday with the goods and services deficit narrowing by 1.5 billion pounds to 2.4 billion. Data this morning was mixed with unemployment improving with a reduced figure down to 7.8 percent although average earnings became worse.
Data seems to be still having much less impact than the focus on interest rates so the Pound is remaining weighed down.
US Dollar – US Markets
Despite gaining on the weaker Pound, the Dollar has fallen against the Euro with US economic optimism figures slipping yesterday afternoon and the trade balance also revealing a swelling deficit up to 45.76 billion Dollars.
US company earnings have also started coming in and spread disappointment with aluminum company Alcoa reporting weaker than expected revenue.
US retail sales are expected to have gained 0.5 percent in March following a 1 percent increase in February with the results being releases later today.
Euro – European Markets
The Euro continues to maintain strength following the European interest rate hike to 1.25 percent last week and on new speculation that there may be another interest rate rise this month.
Industrial production data this morning came in short of expectations – with the sector only growing by 0.4 percent in February rather than the predicted 0.4 percent. This is unlikely to have a significant last impact however. It will take a while for data for April following the rate hike to come through which will reveal if there is much negative impact on the economy and the weaker European economies from the rise.
Other Currencies – Highlights
House prices in New Zealand have risen by 0.5 percent seeing the New Zealand Dollar rise against all major counterparts. News that consumer confidence grew in Australia has also seen the Australian Dollar move up.
The Japanese Yen on the other hand has dropped on the ongoing assumption that the Japanese Central Bank will maintain stimulus measures in the aftermath of the earthquakes.
Sterling Rises on Hopes of EU Softening Tone on Backstop