The Pound held steady this morning, consolidating recent gains against the Dollar after positive UK data, however Sterling’s exchange rate is still being hindered by political opinion polls.
Pound Sterling – UK Markets
Sterling was marginally higher against the dollar and yen in early trading, following stronger than predicted balance of trade statistics. The Pounds exchange rate has since steadied and remains hampered by political indecision prior to the May 6th ballot.
The balance, in terms of goods and services, narrowed from a revised figure of minus £3.9 billion in January to minus £2.1bn in February, reflecting a £1.2bn rise in exports and a £0.6bn fall in imports.
However, despite this progress, there are no data releases scheduled for Wednesday to push the Pound further and focus has returned to the latest opinion polls showing that Britain is still heading for an inconclusive election. This sees the UK exchange rate steady at USD1.5434 and EUR1.1302 at 0935 GMT.
US Dollar – US Markets
The Dollar Index fell to 80.3 today for its fourth decline in a row, the longest losing streak since January. It’s been a volatile session for the Dollar/Yen pair with the US currency falling to its lowest level in two weeks against the Yen in Asia trading. The greenback dropped against the Japanese yen as a report showed the US trade deficit increased in February more than economists expected, making the Dollar less appealing to investors.
However, the greenback retraced some of its losses against the Yen in early session today ahead of a slew of economic data and Federal Reserve Chairman Ben Bernanke's testimony to Congress. Apart from Bernanke’s testimony, US Retail Sales and CPI numbers are due later today. It’s believed that if Retail Sales post a strong gain, they could fuel speculation that the Fed will raise rates sooner than expected.
USD/GBP sat at 0.647 at 0941 GMT whilst the Dollar traded at 0.7323 against the Euro.
Euro – European Markets
The Euro approached its highest level in almost four weeks against the dollar in early trading and various technical charts are forecasting large gains for the single currency.
The after effects of developments in the Greece saga have kept the single currency strong and a ‘double bottom’ pattern on analysts charts suggest a base is being set for the currency to rebound.
AT 0947 GMT EUR/GBP exchange rate was 1.3655 whilst the dingle currency traded at 0.8847 versus the Pound.
Other Currencies – Highlights
Singapore unexpectedly revalued its currency, prompting the biggest gain in a year, after the government raised forecasts for economic growth and inflation.
Elsewhere the Yen weakened for a fifth day against the Euro, its longest sequence of declines in three months, as signs that the global recovery is gaining momentum boosted demand for higher-yielding assets.
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