Sterling hit a one month high on Friday against the US dollar after stronger than expected US retail sales figures helped to boost global risk appetite. Sterling closed the week up by over 1.5% against the US dollar as investors pulled back bets against the pound, but the UK economy remains vulnerable. Growth is weak, public finances are still in a poor state and there is a large exposure to the euro zone which could have a large impact. One group of forecasters downgraded their expectations of UK growth to a mere 0.9% for 2011. It is a relatively quiet day for economic data, but later this week we have the Bank of England’s minutes from the recent meeting where they increased Quantitative Easing by £75bn.

In the euro zone, the euro has started relatively stronger this week after strong US retail sales data on Friday and positive comments from the G20 meeting over the weekend. The finance ministers pledged to ensure that banks were adequately capitalised and called for a comprehensive solution to the crisis to be announced at next week’s EU summit. In terms of data, there is construction activity data later in the week so call in now for a live exchange rate.

In the USA, strong retail sales figures on Friday saw the US dollar weaken over the weekend and markets are looking towards today’s industrial production number for further indications of better than expected growth in the last period. Positive comments regarding the euro zone should see risk appetite improve and the US dollar come under pressure. Later in the week there is housing data and unemployment figures so call in now for a live exchange rate.

Elsewhere, following the boost in risk appetite, the Australian dollar strengthened by 5.5% against the US dollar last week. Stronger employment figures reversed many analyst expectations of interest rate cuts and also helped boost the dollar’s prospects. Call in now to ensure you are not adversely affected by currency market movements.

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