The Pound weakened further against the U.S Dollar.
Sterling / Euro and US Dollar exchange rates
The Pound weakened further against the U.S Dollar yesterday, falling back towards 1.5620 in London, as reports emerged that U.S retail sales increased to a five month high in February. The 1.1% increase in sales reflects the renewed sense of optimism in the U.S economic outlook and suggests the world economy is gathering momentum.
Nonetheless, UK stocks continued to decline in early trading, which also boosted the Dollar from a safe haven perspective, although the SP 500 index rose 0.4% following the retail sales report. The Pound bounced back against the Euro, rising up towards 1.1990, as a report from the Royal Institution of Chartered Surveyors showed that an index of UK house prices climbed to the highest level in 19 months.
The Euro also came under pressure, despite a report in Germany that showed that investor confidence improved beyond initial estimates. The UK trade data was slightly stronger-than-expected with the deficit of £7.5 billion for January, from a revised £7.2 billion, as there was support for an increase in exports to a record high, despite the turmoil in the Euro-zone.
The latest housing data remained subdued with the DCLG house price recording a 0.2% increase in the year to January. The net result was a slightly improved mood of optimism surrounding the UK economy, with markets looking ahead to the unemployment figures this morning. The Pound moved back towards 1.57 against the Dollar last night, before retreating again following the FOMC announcement.
The Pound continued to rise against the Euro, breaking through resistance in the region of 1.20 in anticipation of the jobless data this morning. The report is expected to show that the number of Britons seeking unemployment benefits increased at a slower pace last month. The UK currency is up against 13 out of the 16 most actively traded currencies this morning and a positive result could spark a move higher.
Euro / US Dollar
The Euro initially edged higher against the U.S Dollar yesterday and staged a brief advance from the German ZEW index, which pushed to 22.3 for February, from 5.4 previously, the highest figure since June 2010. The data reinforced a more positive tone surrounding the German economy, although the current conditions estimate was weaker-than-expected.
Fitch Ratings Agency removed the selective default rating on Greece, reflecting the issuance of new bonds, although the impact was limited. There will be important concerns surrounding Portugal and the medium-term Greek outlook, which had some negative impact on the Euro. Expectations that the ECB would maintain an expansionary monetary policy also weakened the single currency.
As expected, the U.S Federal Reserve left interest rates on hold below 0.25% following the latest FOMC meeting. There was a more optimistic stance on the economy with expectations of moderate growth and there was greater confidence in the labour market, while financial market tensions eased slightly. There was no mention of further quantitative easing, but there was still an expectation that interest rates would remain ultra low through 2014.
U.K 09:30 Claimant Count (February)
– ILO Unemployment
U.K 09:30 Average Weekly Earnings (January)
EU 10:00 Industrial Production (January)
EU 10:00 HICP Final (February)
U.S 12:30 Current Account (Q4)
U.S 12:30 Import / Export Prices (February)
- The Pound weakened against the U.S Dollar and the Japanese Yen yesterday
- The Pound weakened against the U.S Dollar and the Japanese Yen exchange rates
- Sterling weakened against 15 out of the 16 most actively traded currencies
- Pound Sterling, the Euro and US Dollar exchange rate currency news – The Pound weakened back towards 1.5820 against the US Dollar
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound weakened against the majors yesterday morning