The Dollar plunged throughout yesterday as currency investors moved funds over into riskier currencies. This has allowed Sterling to surge on the Dollar to a sixteen month high – if you have Pounds to transfer into Dollars therefore then this is the time to speak to your broker about rates and consider whether you would like to fix the rate in advance of your transfer. The Pound fell further against the Euro however although this morning’s surprisingly positive UK retail sales figures allowed the currency to regain some ground. This may also generate more optimism about UK growth with hopes for a better GDP figure.
Pound Sterling – UK Markets
Sterling has risen to a sixteen month high on the US currency as the Dollar Index has dropped and retail sales figures this morning in the UK showed surprise growth where the figure was expected to drop. Sterling also picked up a little on the Euro.
This came after a sharp fall against the Euro yesterday by 0.7 percent as the Bank of England minutes revealed there was no further support for an interest rate hike between policy members.
The retail figures this morning were particularly crucial as retail sales account for a large proportion of GDP and a stronger GDP figure is needed for the first quarter to re-ignite confidence in the UK economy. The positive figure also suggests that the effects of the VAT rise are becoming further diluted. Public Sector net borrowing for this fiscal year ending in March also came in below target.
US Dollar – US Markets
The Dollar Index plunged yesterday as investors moved funds over to riskier currencies such as the Euro. The Dollar Index fell to the sort of levels not seen since summer 2008 and has now fallen by nearly 6 percent in 2011.
The resurgence in risk appetite overcame the better data in the area of existing home sales in the US yesterday which had little chance of helping the Dollar to strengthen. It may be a similar story for jobless claims data later today.
Euro – European Markets
The Euro hit a fifteen month high against the Dollar yesterday and also surged against Sterling as investors sought more risk and the Bank of England minutes spelt out little chance for a rate rise in the near term.
The single currency has therefore managed to recoup losses from earlier in the week about the impact of Greece having to potentially restructure its debt.
Other Currencies – Highlights
The Australian Dollar has risen to an all-time high on the US Dollar and is at around the strongest levels against Sterling in three months. This was triggered by producer prices in Australia beating forecasts, therefore suggesting that inflation is still strong and an interest rate rise might be appropriate.
The producer prices climbed by 2.7 percent between January and March from a year ago. Demand for Australian commodities has also been pushing up the currency.
BoE less likely to increase interest rates in May
UK’s CPI figure in spotlight, as the Pound value drops
Sterling slumps after lower than expected CPI results