Currency news update

Yesterday saw the beginning of the trading week and the final day of the month of April. Sterling continued its recent gains against a basket of currencies as investors continued to see the pound as a safer bet than the weakening dollar and euro.

Following weak US growth data on Friday and continued debt worries in the eurozone, most notably Spain joining the ‘doom and gloom’ party on Monday, the pound rose to 8 month highs against the dollar and a 22 month high against the euro. Analysts however were quick to point out that the UK has now slipped back into recession so any GBP sellers may want to look at fixing rates now as we cannot be sure this pound rally will be sustained. “It makes sense that the pound has performed relatively well of late given the shift in interest rate expectations, but it appears to be overshooting now, particularly as the UK is still in recession,” said Lee Hardman, currency strategist at BTM-UFJ.

With a May Bank Holiday across much of Europe today trading volumes are likely to remain relatively low, however eyes will be on manufacturing data from both the UK and US which will give an indication as to how companies are performing and we have already seen the pound fall away significantly from yesterday’s highs.