Sterling
The main news this week came yesterday as GDP data revealed that the UK had avoided falling into an unprecedented triple-dip-recession after preliminary growth figures for the first quarter exceeded market expectations. After a quiet week for data, the GDP data revealed modest growth of 0.3% when just 0.1% had been anticipated, giving a much-needed psychological boost to consumers, businesses and sterling. The recovery is largely down to a strong performance in a dominant services sector coupled with better North Sea oil and gas output – propelling sterling to rise against all 16 of its major counterparts including reaching one month and two month highs against the euro and US dollar respectively. It has to be remembered that the theme amongst many expert market commentators, just before the Cyprus banking crisis, was that sterling was going to continue in free-fall which highlights the dangers of trying to second guess currency movements. The broader picture of the economy remains largely the same however, whilst these preliminary figures only account for under half of the total data. It is nonetheless an encouraging sign and will no doubt influence the Bank of England's next meeting on monetary policy on the 8th of May. Be in touch with your trader to see if sterling can find further gains into the weekend.
It has been a fairly poor week for the euro as the market reacted to disappointing data coming out of Germany. Data revealed that the German manufacturing sector had contracted to a greater degree than expected whilst the German Business Climate Index dropped more than economists predicted for a second month in a row. The euro also struggled over continued speculation that the European Central bank will lower interest rates next week amidst concerns of a widely faltering economy. ECB money supply data that is being released this morning could have some bearing on the euro's performance throughout the day as could on-going speculation regarding the central bank's interest rate decision and continuing reaction to the UK's growth data. Call in now for live rates and up to the minute information.
The US dollar fell against both the euro and yen on Thursday after a variable week, as a recent batch of disappointing economic data fuelled concerns about the pace of recovery in the United States. Data released on Wednesday showed that orders for American Durable Goods fell by almost 6% in March, almost twice of what was expected and has led to some analysts suggesting that today's GDP data may come up short of the median forecasts. Unemployment data released yesterday revealed that the number of people who filed for unemployment assistance in the US fell significantly more than predicted – providing some much needed contrast to the poor labour related data released recently. All eyes will be on today's advance growth figures this afternoon which are expected to show solid growth of 3.1% – call in now to keep up to date with market reactions.
Elsewhere, commodity backed currencies struggled in the early stages of this week after data from China revealed that the manufacturing sector was slowing down, providing further evidence that their recovery may be faltering. The Japanese yen came close to the key psychological level of 100 against the US dollar this week, though this remained untouched as the currency strengthened early this week. The New Zealand dollar performed well following the news that the Reserve Bank of New Zealand’s left rates unchanged whilst signalling that the central bank was more likely to raise interest rates than cut them. Call in for the latest rates from your dedicated trader.
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