Positive pound pushes gains, Euro bites back

Yesterdays big news saw UK unemployment figures drop to 7.1% – a drop of 167,000 in three months and the biggest reduction seen during this period in over 17 years. As a result the markets reacted and saw the pound gain across the board but most notably gaining over half a cent on the Euro and a cent on the dollar. Following an initial surge in rates much of the market died down and some of the initial gains were reversed, however once the American markets opened these gains were further galvanised in what was a positive day for the pound. Today however we have already seen a reversal of yesterdays half cent gain in the GBP/EUR cross – although we have little in the way of major data releases, surprise positive Markit services and manufacturing data from France and Germany has stopped the loss against sterling and returned strength to the single currency. It is a slightly strange situation in the market at present as across the board the pound is very strong, whilst the Euro seems one of the few currencies that is preventing its advance. No doubt aided by troubles in the US, the Euro is at present fighting the good fight and is certainly demonstrating damage limitation against the recently flying pound. The Euros fight and current position over the USD is demonstrated shown by this morning’s reverse of yesterday’s gains following data that in most cases would not move the market as we have seen. Any of you who have upcoming currency requirements would be well advised to speak to your currency index broker today, as whilst the pound is benefiting from some of the best rates across the board it certainly feels like a slightly unusual situation and one that may not last. With the surprise UK unemployment announcement eyes will now turn towards the Bank of England as to whether or not there will be a change to interest rates, and indeed their forward guidance policy as due to the unexpected change in the labour force. Certainly in the short term it is a very positive time for the pound. With the Euro desperately fighting for recovery, and the US debt crisis reaching near melting point one must question how long this slightly strange situation can last, and with several months now of positive news from the UK is it a matter of time before the pound slips up? Speak to your Currency Index broker today for some friendly and professional guidance – Currency Index can help you stay well informed and well ahead of the market.