Euro Flying High As Sterling Falls

There is no way to sugar coat the current outlook for the UK economy and its subsequent effect on sterling weakness. Even with the sun shining we are set for a number of dark days in the coming weeks. On the other side of the coin if you are looking to buy pounds at the moment we are seeing fresh year-to-date highs for many pairings against GBP. Now may be the time to ‘lock in an exchange’ to take advantage of this. Please contact your broker to discuss the various options available.

Pound Sterling – UK Markets

Manufacturing PMI data for April came in below the expected 57 at 54.6 yesterday which added to growing concerns about the growth potential for the second quarter. This drove the pound to a 13 month low against the euro, trading at around 5% lower than at the start of the year. In addition, housing data released this morning has announced a 0.2% fall in the average house prices for March. Tomorrows’ Bank of England meeting is widely expected to offer no change to the 0.5% base rate set all the way back in March 2009 and so no positive movements are expected off the back of this. The only positive appears to be GBP-USD with the pairing trading at 1.648 this morning.

US Dollar – US Markets

After the brief respite upon the successful Bin Laden mission the dollar has continued on its downward trend. We saw fresh year-to-date lows against both the euro and Australian dollar. As the US-Eurozone interest rate differentials grow wider the flow of trade is continuing against the dollar.

Euro – European Markets

The European Central Bank meets tomorrow for its monthly rate decision. With currency markets expecting a further rate increase, if no increase is announced this could trigger a profit taking rally and see a big day of trading on USD-EUR. Every indication is that it is a fantastic time to sell euro especially against the pound and dollar.

Other Currencies – Highlights

The Australian dollar climbed to a high that has not been seen since its 1983 float this week. Although there was a small retreat yesterday this upward trend is expected to continue on the strength of commodity demand. With a general feelings of uncertainty in the markets the safe-heaven currency of the Yen is continuing to rise. Dollar-Yen has fallen back below ¥81.00, seeing growing pressure on the Bank of Japan to stem Yen strength.