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Sterling hits fresh highs - the Southern Hemisphere new lows

Published:  04 May, 2012

Sterling had a fairly strong week hitting fresh 22 month highs against the euro, while Australia and New Zealand performed badly.

Sterling had a fairly strong week hitting fresh 22 month highs against the euro, while Australia and New Zealand performed badly.

Currency rates - May 4

EURO/GBP - 1.2307

US$/GBP - 1.6178

CHF/GBP - 1.4794

CAN$/GBP - 1.5993

AUS$/GBP - 1.5775

ZAR/GBP - 12.493

JPY/GBP - 129.73

HKD/GBP - 12.5584

NZD/GBP - 2.0210

SEK/GBP - 10.947

AED/GBP - 5.9432

US$/EURO - 1.3141

INR/GBP - 86.97

It also hit four month highs against the New Zealand dollar and a five month high against the Australian dollar; but, weakened off against the US dollar as risk aversion drove the market. Mixed data released in the UK showed weaker than expected manufacturing and services Purchasing Managers' Index (PMI); but, construction PMI beat the markets expectations.



The euro traded in a similar pattern to sterling this week, strengthening against the Australian and New Zealand dollar; but, weakening off against the US dollar. A raft of poor manufacturing PMI data released showed that the manufacturing output had contracted sharply and was at the weakest level in threeyears. The ECB's press conference was surprisingly upbeat with no suggestion that it was not looking to lower interest rates and it anticipated the economy would improve gradually. With retails sales figures released today in addition to the Greek and French elections on the horizon there is the prospect for even more uncertainty in the region if weak governments are formed.



The US performed well this week as risk aversion was the main driver in the market. A mixed week on the data front included manufacturing PMI and unemployment claims beating expectations; but, services PMI and ADP non-farm payrolls data missing the anticipated market figures.



Elsewhere, the Australian and New Zealand dollar were two of the worst performing currencies this week as the Reserve Bank of Australia announced that it had cut interest rates by 0.5% when a 0.25% cut was widely expected and New Zealand's jobless rate figures showed a sharp jump in the first quarter. Other data out this week produced an extremely poor GDP reading from Canada showing that the economy had contracted by 0.2% when 0.2% growth had been anticipated The Reserve Bank of Australia provided its statement on monetary policy last night, Swiss Retails sales are released first thing this morning and PMI data from Canada is released this afternoon.