Pound to Euro and US Dollar exchange rate: The Pound rallied through 1.20 against the Euro to a high of 1.2063

Foreign Exchange Rates Currency News - The Pound rallied through 1.20 against the Euro to a high of 1.2063The Euro edged lower against the Dollar yesterday as losses in the equity market improved demand for safe haven currencies.

Sterling / Euro and US Dollar exchange rates

The Pound rallied through 1.20 against the Euro to a high of 1.2063 by midday in London and the UK currency also rallied towards 1.59 versus the U.S Dollar. Swings in risk sentiment continue to dominate market movement, as the Euro weakened for the first time in a week versus the Yen and lost ground versus the Dollar, as a drop in U.S equity index futures reduced the appeal of high-yielding currencies.

The Dollar is benefiting from its safe haven status once more and in a risk averse environment you would expect this to continue. The Euro also weakened as a report this week is expected to show a contraction in industrial production in the Euro-region, raising the prospect of a recession. The single currency also sold off against all of the majors following comments from the IMF head Christine Lagarde, who urged policy makers to be vigilant about global growth.

There is a host of economic data released this week and the focus in the Euro-zone will fall on the services and manufacturing figures, which are expected to remain below the growth threshold for a second month, a further indication that a contraction in the EZ economy during the first quarter is likely.

In the UK, the Bank of England minutes will be watched closely for any dissent among the nine-strong committee for the decision to hold the bond-purchasing plan this month. The Chancellor’s 2012 budget on Wednesday could also potentially have an impact on the market.

The Pound found support above the 1.58 level against the Dollar yesterday and after initially being trapped in narrow ranges, there was a renewed push higher towards the close of trading last night. Although Sterling was unable to sustain gains through 1.20 versus the Euro, it still remains likely that the Pound will advance to a fresh 13-month high on a trade weighted basis.

There is still a degree of optimism surrounding the UK economic outlook, which provided background support ahead of Wednesday’s budget presentation. The Office of Budget Responsibility was set to raise its growth forecast, which helped lessen fears over a renewed slide into recession and also helped underpin the Pound.

The UK currency has begun the day on the front foot, as the Chancellor George Osborne is expected to say that Britain will avoid a recession this year, after a stronger-than-expected first quarter. Economists expect the UK economy to expand 0.3% in the first three months of the year, putting the economy on course for growth this year of about 0.8%, bouncing back from the fourth quarter contraction in 2011.

Euro / US Dollar

The Euro edged lower against the Dollar yesterday as losses in the equity market improved demand for safe haven currencies. There were no major economic data releases within Europe and sentiment was largely driven by some further concerns surrounding the Portuguese outlook. There are concerns that the country would require additional support and the outlook in Spain also remains uncertain, given the private sector debt level.

The single currency bounced through the course of the day in largely subdued trading conditions. There was general weakness in the U.S bond market as benchmark yields continued to rise and this helped improve risk appetite, which lessened the appeal of the Dollar through the course of the day. The Dollar struggled to gain any buying support from rising yields in Europe.

Data Released

U.K 09:30 – Consumer Price Index (February) – RPI

U.K 11:00 – CBI Industrial Orders (March)

U.S 12:30 – Housing Starts (February) – Permits

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Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/oQs66r3KwjE/

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