Sterling sees some light but will it last? | Smart Daily Currency Note

Sterling

Sterling performed extremely well yesterday especially against the euro regaining the two cents it lost on Friday which highlights how quickly things can change and how volatile markets continue to be.  This is a vast improvement on recent trends despite disappointing construction Purchasing Managers Index (PMI) data being released . As noted, the greatest improvement came against the euro, rising by nearly two cent to over 1.166 – recovering from the 15-month low of 1.1475 we saw on Friday afternoon. Reasons given for the  recovery were firstly that sterling was 'over-sold' and traders took profits and secondly the markets realised that the Eurozone still has some very significant problems that need to be resolved. Having said that it is still important to remember that the fundamental issues that drove sterling weaker still remain. Today see’s the release of important Services PMI data which is an important indicator of current economic health. Call in now to see if sterling can continue to recover from the heavy losses it has incurred of late. 

Euro

The euro's positive news flow was broken yesterday resulting in exchange rates dropping across the board. The 17 nation currency weakened to over 1.166 against sterling, whilst falling below 1.35 against the US dollar after failing to break the key level of resistance of 1.37 on Friday. This weakening has been widely attributed to increasing political turmoil within Italy and Spain, coupled with slumping bond prices within the stated countries.  The Spanish Prime Minister is being called upon to resign following  reports suggesting a corruption scandal which is not only damaging the current government but also confidence in the country as a whole. In Italy – the ex-Prime Minister Berlusconi’s resurgence as a front runner for the next general election is making it look ever more likely that there will be no majority and cause a hung parliament. Today sees the release of services PMI data from Italy, Spain and Europe as a whole; furthermore, we also have Euro-area wide retail sales data being released. Call in now for a live market quote and to discuss the state of the euro with your personal trader. 

US dollar

The US dollar performed fairly well yesterday in the absence of significant data being released from the US and as risk aversion drove the market due to the uncertainty developing in Europe. Today could well see a similar trend with the US dollar taking its cue from elsewhere as the only major data release is the Services PMI figures. The last few months Services PMI releases have come in above expectation and if this week's figures are as positive we can expect markets to react favourably. Good news, especially if backed up by unemployment data on Thursday could indicate that recovery is well underway on the other side of the Atlantic, and drive risk appetite. As the economic health of the region looks up, it may well only be the threat of March's super-cliff that weighs on prices. Call in now for an update and to get a live price from your trader. 

Worldwide

In other news, the Japanese yen weakened again yesterday - breaking through the 93 level against the US dollar for the first time in recent years - before recovering from its decline in a move that suggest the currency may have been oversold. The Polish Zloty gained sharply early yesterday morning, following the news that the Prime Minister's had announced that he plans to launch an official debate into the country's possible adoption of the euro. The Australian dollar performed well yesterday as markets waited on this morning’s Reserve Bank of Australia statements, gaining in anticipation of a narrowing trade deficit and an expected hold on interest rates, which were duly held. Get in touch now for the latest news and prices.