Weekly € rates and comments – week commencing 1st June 2009

Sterling's promising rise against most currencies over the last month or so continued for most of last week. Still managing to close in positive territory on Friday against the euro, sterling's gains of approximately 15 percent against the USD since early March has given the markets a clear signal that risk appetite is back in some force and has directly leant itself to help sterling out of the mire. This week we have the Bank of England meeting on Thursday and the expectation is for no change in interest rates. There is also a raft of economic data out starting today with May's purchasing managers survey for manufacturing. The expectation is for the data to show a slow down in the rate of contraction.

 

The € is sitting at €1.152/£1 inter bank. Much of the Euro-zone economic data released last week, including a Europe-wide inflation report, was as-expected and so had little effect on the euro's value on the markets. Recent large gains against the weakened US$ have helped flatter the euro, as large losses elsewhere, such as against sterling and the Australian dollar have left the euro in the middle ground but in a downward trajectory overall. Positive performances in the equity markets have perhaps allowed the euro to avoid or ignore much of the speculation that a tougher end to 2009 awaits.  This week the European Central Bank meets on Thursday and the expectation is for interest rates to be kept on hold.