The pound has opened up against the majority of the 16 most actively traded currencies in a quiet start to the trading week.
The pound may be benefiting this morning from the continuing risk aversion theme in the markets and the lack of UK economic data. That, sadly cannot be said for the rest of the week which is heavy in UK data releases including unemployment data due out on Wednesday and retail sales on Thursday. Both are likely to show the continuing deterioration in the economic recovery in this country.
On Friday, we saw yet further evidence of a slowdown in the UK’s economy with the publication of UK industrial production. Data showed a fall of 1.7% on the month (1.2% on year) in April against a consensus estimate of a rise of 0.1% on the month (1.4% on year).
As far as UK manufacturing is concerned, output decreased in ten of the 13 sub-sectors and rose in just three sub-sectors between April and May
The dollar was the main beneficiary, climbing on its ‘safe haven’ status amidst all the doom and gloom. It extended gains across the board last week including the euro which continues to wobble on concerns about how European officials will resolve Greece’s debt troubles.
The euro was also weighed down by disappointment over lack of clarity surrounding future interest rate hikes in the euro zone. On Thursday European Central Bank President Jean-Claude Trichet signalled that an interest rate hike in July was likely however he stopped short of indicating that more rate hikes were on the way after that.
The pound is sharply up this morning against the New Zealand dollar, just days after it fell to an all-time low on news that New Zealand has suffered another aftershock from the devastating Christchurch earthquake of February.
Commentary By Tony Redondo
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”
