Euro stays weak as unemployment rises

The past 24 hours were quite strong for sterling. There was some slight negativity in the market due to growth in construction sector slowing down, indicated by The Markit/CIPS construction purchasing managers’ index coming in at 55.8, down from March’s 21-month high of 56.7, contributing to the 0.2% contraction in the economy. However, the total figure is still positive overrall; as long as the number remains over 50, the sector is still in growth. The major problems are in the Eurozone, with unemployment figure in the region as a whole reaching a record high of 10.9%, with the largest increases in Spain, Greece and Cyprus.

There was, however, slightly positive news for Greece, as credit rating agency Standard & Poors upgraded the nations credit rating from “CCC” from “selective default” after the country completed the biggest debt restructuring in history earlier this year. The CBI business group yesterday anticipated that the UK economy would return to growth in the second half of 2012, with 0.7% and 0.5% growth anticipated for the 3rd and 4th quarters respectively, with faster growth expected next year. This has caused the sterling to euro exchange rate to be the best we’ve seen since June 2010. Today’s important data is the UK services PMI data, as well as the Nationwide HPI. In the Eurozone, we await the French Industrial data, as well as a possibly significant ECB press conference.

The Dow Jones reached a 4 year high in the United States, showing a slight increase in manufacturing, as well as a 0.3% increase in consumer spending. This has caused sterling to edge back slightly from the small gains it made against the Dollar yesterday. Important US data out today includes Weekly Initial Jobless Claims , Preliminary Nonfarm Productivity, Preliminary Unit Labor Costs and ISM Non-Manufacturing PMI.