Weekly € rates and comments – week commencing 20th April 2009

The equity rally which started in the previous weeks trading continued last week and helped sterling extend its recent gains against most major currencies. Though sterling's value on the markets is still mainly influenced by risk-appetite/aversion, increased confidence in the UK and global financial sector has clearly helped. This week we have the budget to look forward to. Not sure what the Chancellor can do apart from starting the process to reduce public expenditure. We also have a raft of economic data released this week; inflation data on Tuesday, employment data on Wednesday and retails sales on Friday. So by the end of the week we will have a clearer picture as to how the UK economy is progressing and if there are any "green shoots" of recovery and if the outlook for sterling is any the brighter.

 

 

The euro has suffered during the month of April so far and sits at €1.124/£1 interbank. With an uncertain picture of how the European Central Bank will tackle the mounting issues within its vast and diverse economy the euro has weakened despite a positive rally in European equities markets. Last weeks figures showing that eurozone industrial production fell by almost 20% year on year highlights how difficult conditions are. There are also rumours of a difference of opinion within the ranks of the ECB on monetary policy which may well mean that these decisions from the ECB are far from being made. Euro inflation data released last Wednesday was much as expected but a narrowing of the Euro-Zone Trade-deficit gave the euro a rare positive for the week.