Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements.
Sterling
The results of this report are no doubt attributed to the recent hot weather, but it's not just disposable barbeques, bags of salad and beer deals that gave sterling a boost, it's the hopes of a sustained economic recovery now becoming reality that has helped the markets.
Investors are increasing their expectations of an interest rate hike. Under its "forward guidance" plan, the Bank of England are anticipated to keep interest rates low until the end of 2016 when it expects the jobless rate to fall to 7%. But a steady improvement in data is leading to doubts whether the guidance plan can keep rates floored for that long.
US Dollar
The Pound climbed towards an 2-month high against the US Dollar after UK retail sales beat forecasts and rose significantly more than expected. The 1.1% increase (the fastest annual rise since January 2011) was no doubt aided by the recent hot weather, and has increased hopes of a sustained economic recovery.
The U.S Dollar reversed gains against the Euro and Yen after speculation that the
Federal Reserve could begin reducing stimulus measures as early as next month weighed on demand for US denominated assets. Stocks fell and Treasury Yields reached 2-year highs.
Earlier in the day the Dollar had benefited briefly after positive US Jobless claims data confirmed that the number of applications for unemployment had decreased to the lowest level since October 2007. However any gains were quickly erased after industrial production remained unchanged, highlighting concerns over the weakness of the US economy.
With a quiet economic calendar for the UK and Euro-Zone, markets will be continuing to look for any indications of underlying strength in the US economy today's housing starts data forJuly, as well as the preliminary release of the University of Michigan measure of consumer sentiment for August, will be of interest.
Euro
Yesterday was a quiet day in terms of European economic data, and in this respect the focus remained very much on Wednesday's news that after six consecutive quarters of contraction the Euro-zone had emerged from its longest recession to date.
Reports released over the past few days have been bullish for the euro, with positive GDP results, and a strong outcome for German manufacturing. Euro-zone HICP data due to be released this morning is expected to confirm earlier estimates of a subdued 1.6% inflation rate.(torFX).
