With few significant economic data releases during last week and a tentative air in the markets at present sterling merely continued in its downward trajectory, making marginal losses against most major currencies. However, a slight increase in risk-appetite and business confidence globally led to gains against the US$ as investors fled their safe-haven assets. The main focus of the economic week for the UK was this month's Bank of England's meeting minutes released on Wednesday. In the report we learnt that Mervin King (the Bank's governor) and two of the other eight members' wishes to immediately expand the 'asset purchase scheme' and inject further liquidity into the UK economy. This news instantly devalued sterling on the markets and added speculation that the governor's plans may well be supported by additional members next month as all have supported the notion. This week will see second quarter UK GDP figures, another major indicator for the current health of the UK economy.
There was very little significant eurozone economic data last week but the euro, currently at €1.151/£1, still buoyed by the suggestions in the previous week that France and Germany were essentially leaving recession, enjoyed a positive run against most currencies and neared a one month high against sterling on Friday. A positive trend in the results of the European PMI index since February, which is used as a strong indicator for future business activity, has been a major plus for the euro in recent months. If euro inflation figures due this week are as positive the euro may well improve on this week's good performance.
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