Sterling reaches 22 month high vs. Euro

POUND
Sterling has started to fly again this morning reaching nearly a two year high vs. the euro and over 1.62 against the USD. Despite recent news highlighting the UK has hit another recession, the uncertainty in Europe is making the pound far more favourable than the single currency in addition to BoE minutes last week which were key in pointing to the fact that further QE is unlikely. In most recent news Gfk consumer confidence data coming out more negative has seen little impact on sterling as some analysts forecast last quarter GDP figures to be revised up, and with sentiment towards the UK vastly improved sterling’s run may have more to go.





EURO
The Euro remains weak against the pound but has made gains of nearly 0.25% against the USD even after S&P, the ratings agency downgraded Spain by two notches cementing fears over Euro zone indebted countries, making the single currency the less favourable of the risky currencies. Spain has been downgraded due to forecasts that government finances will deteriorate further in addition to weak jobs and retail sales data. Today the focus will be on the Italian debt auction, with any fall below expectations likely to increase concern over the debt situation and weaken the single currency further.


US DOLLAR
The USD is trading lower against the euro and pound this morning continuing the shift away from the greenback by investors after the latest Fed meeting left the door wide open for more monetary stimulus. Today sees the release of more crucial economic data in the US on growth. Advance GDP is due at 1.30pm with analysts forecasting a figure of 2.6% and if this is realised the data could be enough to show significant growth in the economy to favour strengthening of the USD.

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