The Pound declined against the Euro while making gains against the Dollar after better-than-expected local economic data. PPI rose 0.9% in March, while the average home price in England and Wales increased 1.1% from the previous month adding to signs of an economic recovery. The GBP is now trading at a 6-week high against the greenback. With an election scheduled for May 6, four opinion polls this week suggested no party will gain an overall majority in Parliament as the country struggles with sluggish economic growth and a record deficit. The UK’s budget shortfall reached 11.8% of GDP in the past fiscal year, near Greece’s deficit of 12.9% of GDP last year. With the UK situation worse than that of Portugal, Spain or Italy it could be the next major concern for the market.

The Dollar declined against the Euro and the Pound yesterday as investors raised their appetite for risk amid an improving outlook for future economic growth. As risk trends continue to have an impact on the currency market, positive economic developments in the US could encourage an improved outlook for global growth and lead market participants to seek higher yielding investments. However, the correlation between the USD and risk is likely to deviate over the near-term as the Fed aims to normalize its monetary policy this year.

The world’s reserve currency is also likely to face increased volatility throughout this week as an economic docket chock-full of key inflation, retail sales, and manufacturing data, is expected to reinforce the nascent recovery of the world’s largest economy. A steady stream of mostly sanguine economic data last week helped to bolster investor confidence lending credence to the notion that the worst is well behind.

The Euro made gains against Pound and the Dollar buoyed by optimism following the announcement of an aid package for Greece that lifted the single currency. The euro broke from its recent ranges following the announcement of the multi-party deal. In a coordinated effort, Eurozone countries pledged EUR 30B in aid to Greece with the IMF also expected to contribute another EUR 10B. The news came as welcome relief for the E-16, which has shown progressing improvement from its economic slump. Last week saw the Region’s PMI make further inroads to 55.9.

Data released 13th April 2010

UK      09.30 DCLG House Prices (February)

UK      09.30 Trade Balance (February)

Non EU Trade

US      13.30 Export Prices (March)

Import Prices

US      13.30 International Trade Balance (February)

GBP/USD CHART

A very interesting couple of days trading since our last chart shows that we indeed had a good look at the market on the support levels at 1.4852 and 1.4781, the latter really not being tested at all. We are now trading back into the belly of our range and are looking for direction regarding our next move. I still feel that in the run up to our election and the uncertainty surrounding the outcome, that sterling could be put under pressure and a retest of the support levels is inevitable, only a close above our resistance level at 1.5349 would indicate a reversal of the current trend.

Disclaimer

The above details are only the authors own opinion. Markets can be very volatile and prices will fluctuate as a result. Any decision to buy or sell currency is purely at your own discretion.

The Pound made some serious gains against the Euro and the Dollar as data showed that the UK economy grew a bit more swiftly than expected. The Pound had its best day against the Dollar in nearly two weeks after revised GDP data showed that the economy grew 0.4 percent in the fourth quarter. A separate report also showed that UK house prices rose in March.

The Dollar made gains against the Euro while declining against the Pound as global stocks rose and oil traded near the highest level in more than a week increasing risk appetite. Although markets showed little reaction to data ,which showed that prices for US single family homes rose for the eighth straight month in January, the release of US consumer confidence data boosted optimism in the market. Confidence among US consumers climbed in March as Americans perceived that employment was starting to improve. The Conference Board’s confidence index rose to 52.5, exceeding the median forecast of 46.4 in February.

The Euro declined against the Pound and the Dollar after data showed that US consumers were feeling more confident about the future in March, giving a slight boost to investor risk sentiment. The single currency also hit a two-month high against the yen on relief that Greece was able to raise funds from the market, though gains were quickly trimmed as wider euro zone fiscal concerns weighed on sentiment. The euro should continue to trade with a limited upside potential given that the euro zone’s debt problems and weak growth mean the European Central Bank is in no rush to hike interest rates.

Data released 31st March 2010

EU      10.00 Flash HICP (March)

EU      10.00 Unemployment (February)

US      13.15 ADP Employment (March)

US      14.45 Chicago PMI (March)

US      15.00 Factory Orders (February)

Exchange rates

GBP/EUR 1.1233

GBP/USD 1.5096

EUR/USD 1.3438

GBP/AED 5.5460

The Pound declined against the Euro and made gains against the Dollar on Friday as UK business investment was revised a little higher in Q4 but was still down a steep –4.3% in the quarter and –23.5% yr, the sharpest drop in annual terms in records which stretch back to 1967.

Chancellor of the Exchequer Darling last week reported his latest economic growth forecast is “in line with the Bank of England forecast.”  Darling said he plans to “reduce borrowing further” and reduced his budget deficit forecast for the next five fiscal years by £44 billion.  On the whole, Darling’s fiscal report was more proactive than expected about addressing the U.K.’s fiscal problems.  The U.K.’s 2009-2010 budget deficit is expected to total around £167 billion and be slightly less in the 2010-2011 fiscal year.

The Dollar declined against the Euro and the Pound on Friday as US GDP growth was revised down from 5.9% to 5.6% annualised in Q4 and US UoM consumer sentiment was revised higher in March. The modest upward revision to UoM consumer sentiment from 72.5 to 73.6 leaves the index unchanged from February.

The Euro made gains against the Pound and the Dollar on comments by ECB’s president Trichet at a late Thursday’s news conference in Europe, where he denied criticizing the inclusion of IMF finance in any rescue package and stated that he was ‘extraordinarily happy that the governments of the euro area found out a workable solution.

Data released 29^th March 2010

UK      09.30 Consumer Credit (February)

UK      09.30 Mortgage Applications (February)

EU      10.00 EC Business Climate (March)

EU      10.00 EC Economic Sentiment (March)

Consumer / Industrial / Services

US      13.30 Personal Income / Consumption (February) +

Core PCE

AUD/USD CHART

The above market has traded sideways for a six month period and as we know this is in a very long term uptrend and we could well be getting ready for the next move up. We would have to take out the 0.9056 level first which has been strong resistance lately and then attack the 0.9334 level which would leave the highs exposed, we need to be trading under the 0.8806 level of support to suggest the long term uptrend has been broken. We have to stay with the trend in place so would look to see the market trade to the upside.

Disclaimer

The above details are only the authors own opinion. Markets can be very volatile and prices will fluctuate as a result. Any decision to buy or sell currency is purely at your own discretion.