Sterling
Sterling started Tuesday badly, weakening against the majority of its trading partners (falling to another yearly low against the US dollar and levels last seen in 2010), due to unexpectedly poor manufacturing and industrial output data showing further contraction. The trade deficit was narrower than expected but the house price balance declined. It was also reported that the future Bank of England (BoE) Governor (currently the Bank of Canada Governor) met with a UK top treasury civil servant to discuss potential changes in UK's monetary policy. A GDP estimate released from the National Institute of Economic and Social Research (NIESR) suggested the UK contracted by 0.1% in February whist revising January's estimate up to 0.0% from -0.2%. Sterling regained some of its losses throughout the rest of the day, but, expect the markets to remain extremely nervous ahead of next weeks BoE meeting minutes being released and the Chancellors Budget announcement. We have a quiet rest of the week in terms of UK data released, call in now for the latest live rates and updates.
Euro
It was a busy day for the 17- nation currency yesterday, swinging in both directions against all of its major peers, peaking at 1.1370 against sterling - the same level that was reached two weeks ago following the downgrade of the UK's credit rating. Towards the end of the day the euro lost ground after comments from the German finance minister who suggested that Cyprus would not be granted a bail out until some form of bank restructuring had been agreed. Furthermore, he also suggested that the "crisis is not over despite the recent calm on financial markets." Today the January industrial production figures for the Eurozone are released with markets expecting to see production shrink by 0.1% following Decembers improvement of 0.7%. Traders will be paying a watchful eye to the EU Economic Summit starting tomorrow, which is likely to bring more volatility to the market, so call in today for the latest news from the Eurozone
The US dollar had a mixed day yesterday, benefiting against sterling following the release of very weak manufacturing figures in the UK which helped push the US dollar to a two and a half year high. The afternoon, however, saw rates climb back up to the levels seen in the morning to end trading in London back up around 1.49. Conversely, the US dollar did poorly against the euro during yesterday afternoon, before recovering, with the euro dollar rate ending the day in London at just above 1.3. This afternoon sees the release of two key retail statistics, both of which are expected to bring positive news - which would give further indication of a continued US economic recovery and give greater support to the US dollars recent strength. Call in for the latest rates and up to date market information.
Elsewhere, the Hungarian forint was the worst performing currency yesterday, falling against all of its major trading partners due to fears surrounding the actions taken by the new central bank governor over inflation. The South African rand was also particularly weak following the nations account deficit widening by more than originally forecast in the fourth quarter of 2012. The Japanese yen recovered from a three and a half year low against the US dollar after the opposition party suggested it would oppose the nomination of Iwata as governor of the Bank of Japan. This evening we have the Reserve Bank of New Zealand's interest rate decision - expected to be help at 2.5%. Call in now for a live quote.
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