USD strength helps Pound make Euro gains

This week, albeit a fairly quiet one for data has seen some interesting movements in the major pairings – Pound, Dollar and Euro. Following Tuesdays unexpected positive PMI data from the UK the Pound began to make gains – much welcomed given the lost ground over the past few weeks. Wednesdays Federal Open Market Committee minutes showing divided opinions over the timing of US interest rate hikes (some favouring this summer, whilst others suggesting next year) halted any potential Pound advances against the Dollar and indeed from elsewhere, but as we have seen in recent weeks then helped for it to gain against the Single currency as a strong USD in most cases encourages the Euro to weaken.

This pattern continued during yesterday’s trading with the Dollar continuing to strengthen whilst the Euro weakened. In the morning we saw Eurozone export data come in above expectation, but with a shortfall shown in their trade balance it allowed advances to be made against it. This was slightly halted for the pound following similar trade balance data which also came in under expectation and for the early part of the day’s trading GBP>EUR rates traded both up and down within a fairly tight range. This changed in the afternoon following US jobless claims data – both coming in better than expected – which once again fuelled the Greenback and again allowed the Pound to slowly advance against the Euro, stealing around half a cent by the end of the day’s trading.

Today will no doubt be an interesting and busy day on the market as we have a raft of Industrial and Manufacturing production data from the UK and export data from the US this morning. This afternoon elsewhere and of note we have Canadian Unemployment data, but the real focus will be on this afternoon when the NIESR GDP estimate for the UK is announced.

With a relatively quiet day for everyone bar the Pound, will we see the Pound continue to make gains against the currently weak Euro? Can it turn the tables on the storming US Dollar? And are we seeing another push down to parity for the EUR>USD pairing?

Certainly at the moment it would seem the USD is winning the race, with the Pound only slightly leading against the very weak Euro. However with so much going on outside Economic data including an upcoming UK General Election it will no doubt be a turbulent and volatile few weeks in the Currency markets.

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