Pound to Euro and US Dollars: The Pound continued to edge closer towards 1.20 versus the Euro

Foreign Exchange Rates Currency News - The Pound rallied towards the highest level in three weeks against the US DollarThe Euro remained in a tight trading range against the U.S Dollar yesterday, despite the improvement in risk appetite.

Sterling / Euro and US Dollar exchange rates

The Pound continued to edge closer towards 1.20 versus the Euro exchange rate yesterday and we feel this represents a good opportunity for Euro exchange rate buyers who felt concerned by the recent depreciation towards a 12-week low at 1.1760. There is still the potential for the market to sell off once more and achieving a rate close to 1.20 could represent a time to trade.

The UK currency also remained in the ascendancy versus the U.S Dollar and traded above the 200-day moving average at 1.5902 to indicate that a move through 1.60 seems likely in the near-term. The Dollar declined against the higher-yielding currencies like the Australian Dollar and New Zealand Dollar before a report showed that U.S manufacturing accelerated in February, reducing demand for safe haven currencies like the Dollar and improving risk appetite.

The Aussie gained against all of the 16 most actively traded currencies, as signs of an improvement in Chinese manufacturing boosted the outlook for exports in the region. The Pound will encounter strong resistance in the region of 1.20 against the Euro, amid expectations of strong importer demand close to this level.

The latest PMI manufacturing data was marginally weaker-than-expected with the manufacturing index edging down to 51.2 from 52 previously. There was, however, some relief that the index stayed above the pivotal 50 level for the month to indicate growth in the sector and this helped to reduce expectations of another recession.

There was also an increase in UK house prices according to the latest Nationwide survey. There continued to be a net reduction in expectations surrounding further quantitative easing, which helped support the Pound. There was also expectation that the ECB would be more aggressive than the Bank of England in expanding monetary policy, which also helped underpin the currency.

Euro / US Dollar

The Euro exchange rate remained in a tight trading range against the U.S Dollar yesterday, despite the improvement in risk appetite, which reduced demand for the U.S currency as a safe haven. The European unemployment rate rose to the highest level in 15-years of 10.7% for January, from a revised 10.6% the previous month.

The Greek debt situation remained an important focus as the IDA ruled that the Greek private sector debt swap and the ECB bond swap did not constitute a credit event, which would trigger default payments. There were also signs of further tensions between the ECB and the Bundesbank, as a letter between Weidmann and Draghi revealed policy disagreements.

In the U.S, the jobless claims data recorded a small change at 351,000 in the latest week, while there was a small increase in personal spending. There was also a decline in manufacturing, although components of the report showed solid readings for new orders and employment. The Dollar gained some support against the Euro on yield grounds last night.

Data Released

U.K 09:30 – Construction PMI (February)

Related posts:

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  3. The Pound continued to lose momentum against the Euro exchange rate
  4. The Pound weakened 0.3% against the Euro and also lost ground versus the U.S Dollar
  5. Sterling Euro US Dollar Foreign Currency Forecast – The pound continued its current downward trajectory

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

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