The Euro declined steadily through the course of the day and a break of near-term support levels around 1.33 helped trigger further losses towards 1.3250.
Sterling / Euro and US Dollar exchange rates
The Pound rallied from the lowest level in two weeks versus the Euro yesterday, after the EC economic sentiment index showed that consumer confidence declined this month, which has boosted the appeal of UK-denominated assets as a haven to the debt crisis engulfing much of Europe. The UK currency subsequently bounced back from its first quarterly drop against the Euro since June, amid speculation that investors will continue to buy Sterling as an alternative.
The Pound continued to decline against the U.S Dollar, however, after the Nationwide Building Society said that UK house prices declined this month. Sterling has now weakened for three straight days against the Dollar, which has coincided with a decline in risk appetite, with stocks falling worldwide. A separate report from the Bank of England showed that UK mortgage approvals declined in February, with lenders granting fewer loans for home purchases.
The most recent economic data has pointed to further weakness in the UK economy and it will take some positive reports to push the Pound back onto the front foot. The Australian Dollar declined against all of the major currencies again yesterday, after the Treasurer Wayne Swan said that government spending cuts would be necessary to meet the country’s budget surplus target.
The Aussie also came under further selling pressure, trading above 1.53 against the Pound for the first time in 2012, amid concern that China’s manufacturing growth is slowing. The Canadian Dollar declined for a third day against its U.S counterpart and also lost ground versus a basket of currencies, including the Pound, amid concern that the global economy is slowing, further hampering risk appetite.
There a solid reading for UK consumer lending, which may increase optimism that better lending conditions will result in higher retail sales numbers over the coming months. However, there was also a sharp decline in money supply, which reinforced fears surrounding bank lending. The net impact was to reinforce speculation that the Bank of England would have to resort to further quantitative easing over the coming months.
The Pound found support in the region of 1.5850 against the U.S Dollar and rallied again through the Asian trading session towards the 1.60 level, despite a weak consumer confidence reading at midnight. An index of sentiment dropped to minus 31, from minus 29 in February, as the Chancellor George Osborne pledged to maintain austerity measures in the this month’s budget.
Euro / US Dollar
The Euro declined steadily through the course of the day and a break of near-term support levels around 1.33 helped trigger further losses towards 1.3250. There were further concerns surrounding the outlook for the Euro-zone with a particular focus on Spain and Italy. The general strike in Spain went ahead, amid the uncertainty of today’s budget presentation, which had a significant impact on sentiment.
There were fresh concerns surrounding the Italian outlook, as yield spreads over German bunds widened. There was also a renewed deterioration in business confidence, which reinforced growth doubts and offset the impact of a larger than expected decline in German unemployment. The Dollar also gained ground following a report from the OECD, which suggested the U.S economy would continue to outperform Europe.
The U.S gross domestic product data was largely in line with expectations at 3% for the fourth quarter final reading. Initial jobless claims were higher-than-expected at 359,000 for the latest week, from a revised 364,000 previously. The Dollar was unable to sustain its advance against the Euro and traded back towards 1.3350 this morning.
Data Released Today
U.K 00:01 – Gfk Consumer Confidence (March)
EU 10:00 – Flash HICP (March)
U.S 13:30 – Personal Income / Consumption (February) – Core PCE
U.S 14:45 – Chicago PMI (March)
U.S 14:55 – Final Michigan Sentiment (March)
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound rallied towards the highest level in six weeks against the Euro
- Pound Sterling, the Euro and US Dollar Currency News – The Pound traded close to the lowest level in three weeks against the Euro
- Pound Sterling, the Euro and US Dollar Currency News – The Pound declined to the lowest level in three weeks against the US Dollar
- The Pound rallied towards the highest level in three weeks against the US Dollar
- The Pound slumped to the lowest level in a week versus the Euro