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Sterling hits 22 month high against euro

Published:  30 April, 2012

Sterling had a strong day on Friday breaking through new resistance hitting a 22 month high of 1.2292 against the euro and an eight month high of 1.6279 against the US dollar as news from Europe and the US drove the market.

Sterling had a strong day on Friday breaking through new resistance hitting a 22 month high of 1.2292 against the euro and an eight month high of 1.6279 against the US dollar as news from Europe and the US drove the market

Currency rates, April 30:

EURO/GBP - 1.2282
US$/GBP - 1.6294
CHF/GBP - 1.4764
CAN$/GBP - 1.5982
AUS$/GBP - 1.5586
ZAR/GBP - 12.595
JPY/GBP - 130.52
HKD/GBP - 12.6401
NZD/GBP - 1.9812
SEK/GBP - 10.936
AED/GBP - 5.9781
US$/EURO - 1.3258
INR/GBP - 85.46

If the manufacturing, construction and services Purchasing Managers' Index (PMI) figures released this week are poor, sterling will be under pressure following the weak GDP figures last week.

The euro had a very poor start to the day on Friday as Standard and Poor's (one of the big three credit rating agency's) downgraded Spain two notches from A to BBB+ whilst giving Spain a negative outlook. A relatively solid Italian bond auction saw the euro recover somewhat during the day and the euro hit a 2.5 week high against the US dollar of 1.3270. This week, the European Central Bank's is expected to keep rates unchanged; furthermore, any news regarding Spain or the French elections could move the market significantly.

The US dollar had a poor day on Friday as worse than expected GDP data caused more speculation that the Federal Reserve may look to implement further Quantitative Easing. The Institute for Supply Management (ISM) PMI indices and the influential non-farm payroll data release will be some of the main drivers in the global foreign exchange market this week. Any variation away from the expected values has caused a lot of volatility in the past.

Elsewhere, the Australian and New Zealand dollar performed well on Friday as did the Japanese yen as the Bank of Japan voted unanimously to increase its asset purchase facility by 5 trillion yen. This week, the Reserve Bank of Australia is expected to announce a 25 basis points cut in its interest rate this week to 4.00% with the markets anticipating a further 25 basis point cut in June. Other data out this week includes Chinese Manufacturing PMI, Canadian GDP data and unemployment data from New Zealand.

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