Sterling Closes The Month Up

The end of the month saw some unexpected gains for the pound across the board, driven not by any positive UK data, as there was only one non-key release, but by a raft of poor Eurozone releases. We started off in Germany with the Gfk consumer confidence survey which came in lower than expected. As Germany is the “powerhouse” of the single economic area, this is seen as an indicator to the general sentiment in the zone. German retail sales were also down, another blow to sentiment which was countered here in the UK by Nationwide house price indicator which showed a sharp increase, well above expectations. Later in the morning the trend was set, as Italian inflation figures registered well under forecasts along with EU inflation which also massively missed the mark, coming in half a percent under the analyst expectations. To compound the Euros losses, unemployment in the zone was 0.2 percent above expected. So a flurry of missed expectations for the Eurozone paved the way for the single currency to lose major ground across the board, including a cent and a half against the US dollar and the Pound. With sterling being the more favoured currency out of the three majors, it made gains against a basket of major currencies throughout the day. The US data in the afternoon had a small positive effect for the dollar but nothing of note allowing sterling to keep its closing levels overnight into the new month. So as we start a new month, but end the week it’s a fairly quiet day on the data front. Manufacturing PMI for the Eurozone came out as expected, the UK’s is yet to be released and that’s it until some US releases this afternoon. A speech by Fed member Bullard may give a bit of spark at lunchtime but apart from that, expect a pretty flat day.