POUND
Sterling is trading stronger against the USD this morning and is staying relatively stable against the Euro within the 1.19 region. Most recent economic data has been flat with retails sales data out as expected at 0.6%. Market sentiment has improved towards riskier assets but further gains may well be hampered by concerns over the fragile state of the UK economy. There is some speculation of foreign investment flows are aiding the pound with China’s sovereign wealth fund taking a stake in Thames water. The outlook for sterling remains shaky with inflation now lower, the BoE has more room to manoeuvre on quantitative easing in order to starve off the ongoing threat of another UK recession.
EURO
The Euro has been supported by a return to risk appetite in the foreign exchange markets, making gains against the pound and USD. The single currency has reached a two week high against the USD as solid debt auctions this week have increased optimism over Greece being able to a agree a deal with it’s creditors to avoid any default. The Greek issue is still the main focus in Europe at the moment and although we are hearing things are going well between leaders the problem remains a problem until it is resolved
US DOLLAR
The USD has lost out a little today with an improvement in risk sentiment seeing a sell off in the global currency vs the majors. In terms of economic data US CPI inflation data came out in line with expectations at 3.0% y/y for last month while weekly jobless claims fell more than expected to 352k from 402k. Today we are due existing home sales data later this afternoon.
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