Sterling
Sterling continued its upward trend on Friday strengthening for a fifth day against both the euro and the US dollar following Thursday’s news the UK had avoided a triple-dip recession and grown slightly beyond expectations. The main data released this week will be the Purchase Manager’s indices (PMI) for the manufacturing, construction and services sectors. At present, the manufacturing and construction sectors are both expected to show their respective sectors are contracting whilst the services sector (which makes up nearly 70% of the UK's output) is predicted to be show slight expansion. Other data released this week includes the net lending levels to individuals, mortgage approvals figures and house price data. With recent good news, analysts hope for a gradual improvement across the board, but it remains a slim margin whether developments impact positively or negatively on the sterling, so call in to keep abreast of reactions and price levels throughout the week.
The euro struggled on Friday as leading banks continue to speculate that the European Central Bank (ECB) will look to cut interest rates at Thursdays central bank meeting. The ECB published two sets of data on Friday showing lending across its 17 nations remains at low levels as businesses struggled with weak demand and difficulty in obtaining financing. The Spanish government downgraded its economic forecasts as it struggles with economic contraction and heavy austerity measures; symptomatic of a Eurozone that is struggling to get back to sustained growth. This week, alongside expectations the ECB will push interest rates to record lows on Thursday, we also see the release of Europe-wide unemployment and inflation data, economic forecasts from the EU and a raft of data from Germany. Get in touch now for up-to-the-second developments on euro prices.
The US dollar had an extremely poor day on Friday, falling against the majority of its 16 major peers following data showing US gross domestic product increased by less than expected (2.5% compared to the forecast 3.0%), fuelling worries that the US economy is failing to grow in line with expectations. With GDP data falling short of market estimates and inflation remaining low, this has led to some analysts predicting that the Federal Reserve will continue with its stimulus program for longer than has been recently suggested in order to help support the economy. Hints of when the Federal Bank may look to tighten monetary policy may come from the statement that follows the central banks monetary policy decision on Thursday. Manufacturing and non-Manufacturing PMI figures will also be announced this week alongside a raft of unemployment data which includes the highly influential non – farm pay roll data which will be announced on Friday. Speak to one of your traders for the latest news and to get a live quote.
Friday saw the Japanese yen as the stand out performer after the Bank of Japan left monetary policy unchanged. The Australian and New Zealand dollars strengthened for the third consecutive day against a struggling US dollar as a result of market rumours that the major central banks are to start putting money into the higher-yielding South Pacific currencies. The New Zealand Dollar had a particularly strong day as export data came in better than expected. The South African rand fell for the first time in four days, as its central bank announced that increased borrowing and that rising inflation could push bond yields up. It is a busy week for data which sees the release of business confidence data from New Zealand, Chinese Manufacturing PMI, Australian inflation data and building approvals statistics, and from Canada we see GDP data and trade balance figures released. Get in touch for the latest rates.
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