Sterling hit a 2 week high against the US dollar yesterday after industrial order data showed that the UK recovery is gaining momentum. Sterling also saw some strength against the euro as concerns over the European debt crisis continued to blight the single currency. Sterling hit a high of $1.5834/£1 and closed the day above €1.19/£1 after hitting a high of €1.1954/£1 earlier in the day. A survey by the Confederation of British Industry showed that industrial orders unexpectedly jumped to -3, which is the highest level since June 2008 as export orders hit a 15 year high as the impact of the weaker pound filtered through. If UK data continues to impress, we may see sterling break out of being stuck between the US dollar and euro and begin to make headway against both currencies at the same time. Out today we have the Bank of England’s interest rate decision – seen by many as a non-event given the low probability of any change to policy. Speak to one of the team for a live exchange rate.
In the Euro zone, the single currency continued to suffer as a result of the debt crisis, with many investors uncertain as to how far it would spread. Ireland did move a step closer to gaining access to bailout funds as the Irish parliament voted in favour of the toughest budget on record in the first round vote. Any strength that the euro sees following an approval of the budget is likely to be short lived according to many analysts, so call in to speak to one of the team and ensure you buy at the best time.
In the USA, following the extension of tax breaks by President Obama on Monday; financial markets feel much more positive about the prospects for the US recovery. The tax breaks are expected to encourage growth, as businesses and individuals spend their additional disposable income and give a boost to the economy. Released today, there is the weekly US unemployment claimant count. Last week saw a bizarre drop in the number of new jobs created so the markets will be keeping a close eye later today.
Elsewhere, a key advisor to the Chinese central bank believes that the USA is in a worse state than Europe. Speaking at a financial forum n Beijing, Li Daokui stated that for the next 2 years, the US dollar will be a safe investment, but as the Euro zone situation stabilises, the US will come under scrutiny assets will experience serious declines.
EURO/GBP – 1.1892
US$/GBP – 1.5806
CHF/GBP – 1.5542
CAN$/GBP – 1.5946
AUS$/GBP – 1.6009
ZAR/GBP – 10.9059
JPY/GBP – 132.52
HKD/GBP – 12.2878
NZD/GBP – 2.1112
SEK/GBP – 10.8462
US$/EURO – 1.3296
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