The pound fell against all the major currencies with the notable exception of the euro yesterday.
The euro retreated across the board for the sixth consecutive day amid renewed worries about the euro zone sovereign debt crisis.
The fall in the euro followed a slump among European stocks on increasing concern about the euro zone banking system. Concerns about Europe’s fragile banking sector was knocked after a US Federal lawsuit was filed against 17 banks over the sale of home mortgage-backed securities during the housing bubble.
US markets were closed yesterday for the Labor Day holiday.
In the UK, another gloomy snapshot of the UK economy did little to lighten the mood. Growth in the services sector, the biggest sector in the UK economy slumped by the most since August 2001.
Meanwhile, the CBI believes that the government needs to deliver a ‘game-changing’ growth plan if they are going to have a chance of reviving the flagging British economy in 2012. The CBI also downgraded its forecasts for next year.
The latest data on the services sector came hot on the heels of data from the UK manufacturing sector showing it contracted at an even faster rate than in July, while growth in the construction sector also slowed.
The services sector accounts for more than three quarters of Britain’s economic output.
Gold reached another record high as concerns mount over the ill health of the world economy.
Commentary by Tony Redondo
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