Weekly € rates and comments – week commencing 27th April 2009

Sterling suffered a rather poor week on the markets thanks to an array of poor data and publications released throughout last week. Improvements from the prior week's trading which had seen sterling hit multi-week-highs against the euro and US$ unwound gradually as confidence in the pound dwindled. Last Wednesday's budget announcement from the Chancellor, the release of the Bank of England meeting minutes and jobless figures for March combined to weaken sterling with weaker-than-expected UK GDP data compounding the losses on Friday. We also learnt last week the level of UK government debt we as a nation will be taking on over the next few years. The figures are based on what some say are over-optimistic predictions and therefore could well be substantially worse than forecast. Despite the poor news and data sterling performance showed a level of resilience not seen in previous months and this should be as a positive for the medium term.  On Friday we see the release of data released on UK manufacturing and mortgage approvals. Improvements are expected in both with the former helped by new orders and sterling weakness.

 

The euro sits at €1.104/£1 interbank. Euro zone economic data was very thin on the ground last week. The lack of significant news as well as the poor performance by sterling and the US$ flattered the euro, eventually closing roughly 2% higher against both currencies. The US equity markets have enjoyed six consecutive weeks of gains and this optimism has been supported by some encouraging housing market data, but as before, in the current market positive US economic data has encouraged risk-taking and resulted in a weaker US$. There is a mixture of economic data out this week so it will be interesting to see how the disparate parts of the euro zone are doing.