Sterling rose this morning to recover from a three-week low against the Dollar despite yesterday’s slide following Alistair Darling’s budget announcement.
Pound Sterling – UK Markets
Traders cited sovereign demand which gave the Pound a lift in early trading. The government has pledged a 2.5 billion pound plan to boost growth, and lower borrowing. However, analysts remain skeptical as yesterday’s budget did little to ease worries about Britain's mounting deficit or the possibility of a hung parliament come Election Day.
At 0938 GMT Sterling traded at USD1.4875 and the Pound Euro rate was 1.1185. Market participants are currently awaiting a reading of UK retail sales for February to see if consumer demand has improved from the previous month.
US Dollar – US Markets
The Dollar extended gains against most major currencies yesterday after a report showed new orders for long-lasting US manufactured goods rose for the third straight month in February.
Today at 0947 GMT the greenback traded at GBP0.6722 and EUR0.7519.
The most important American economic indicator scheduled to be released today is the Unemployment Claims at 1230 GMT. Traders will be paying close attention to this announcement as a stronger than expected result may boost the greenback in the short-term. Traders are also advised to follow Fed Chairman Ben Bernanke's testimony which will take place around 1400 GMT.
Euro – European Markets
The Euro continued to trade near a 10-month low against the dollar on concerns a meeting of European Union leaders starting today will fail to make any progress on a financial aid plan for Greece
The Euro exchange rate also slumped as a ratings firm downgraded Portugal, adding to worries over debt sustainability and growth in some of the Euro-Zone's smaller countries.
At the time of writing the Euro traded at 1.3298 against the Dollar and 0.8939 against Sterling.
Other Currencies – Highlights
The Australian dollar rose after yesterday’s biggest drop in seven weeks as a Reserve Bank of Australia Assistant Governor said benchmark borrowing costs need to climb toward “normal levels” to contain inflation.
Meanwhile the Yen gained versus 14 of its 16 major counterparts as Japanese exporters bought the currency to hedge sales generated outside Japan.
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