UK employment data boosts sterling | Smart Daily Currency Note

Sterling

A day of two halves for sterling yesterday, gaining nearly half a cent in the first two hours of trading as employment figures exceeded expectations. Markets reacted positively to the news, driving sterling briefly through the 1.18 mark against the euro. The momentum remained with sterling through the day against the US dollar, but it couldn't hold on to its gains against the euro, slipping back to the 1.175 levels. Today the excitement will come from elsewhere in the world as little news is expected from the UK. The key question will be, can sterling keep climbing against the US dollar - call your trader now to find out.

Euro

The euro experienced greater volatility yesterday in what was one of the more eventful days of the week. Following the better than expected UK employment data the euro weakened initially against sterling but pulled back later in the day. By the end of the day the single currency had marginally strengthened against the US dollar, despite a more shaky performance early in the day. The seventeen-nation currency may have been given a boost following the release of better than expected Eurozone industrial production figures, which showed a modest increase. The ECB monthly bulletin, which reveals the statistical basis of the Central Bank's most recent interest rate decision, is released today and may give some further insight into the economic state of the Eurozone. Call in now to stay up to date with market news and for a live rate.

US dollar

The US dollar had a bad day losing ground across the board. For emerging market currencies such as the South African rand and the Indian rupee this seems to have been a “correction” following the significant gains made by the US dollar over the previous two days. Worries over when the Federal Reserve will discontinue their bond buying programme were the driver for the previous day’s gains. Elsewhere there was a continuance of the short term trend of US dollar weakness. Today we have the release of US retail sales figures which should give further insight into the state of the US economy and the likelihood of a reduction in the bond buying programme. Call in to see how the US dollar is faring today.

Worldwide

Elsewhere, the South African Rand had a very poor day yesterday against sterling. After having been weakening fairly consistently over previous months due to a variety of global factors, the strong employment data out of the UK exacerbated the rand weakness, resulting in the lowest levels rand has seen against the pound since 2008. Yesterday we also saw the Australian dollar rebound from the 3-year lows we saw on Monday. The gains were down to better-than-forecast consumer confidence data showing a slight recovery in June. The Japanese yen had a difficult start to the day, falling against all of its 16 major counterparts amid rumours of further monetary stimulus from the Bank of Japan; however, we did see the yen recover slightly against the US dollar towards the end of the day. In New Zealand interest rates were kept on hold and the expectation is that they will be kept on hold for the rest of the year. Get in touch to see how the markets respond.