Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. GBPEUR/GBPUSD The Pound briefly slipped back under 1.21 against the Euro yesterday, while the UK currency also traded back towards 1.58 versus the U.S Dollar in the morning, as swings in risk sentiment continued to dominate market movement. Nevertheless, U.S stocks rose for the first time in four days, ahead of the start of the first quarter earnings season, which reduced the appeal of the U.S Dollar as a haven, as traders sought higher-yielding assets amid the injection of confidence into the market. The Euro outlook appears bleak with the single currency still on the back foot and it seems likely that further losses will be forthcoming, as concerns over the peripheral economies re-surface. Budget cuts in Spain and Italy threaten to reignite the sovereign debt crisis that has plagued the Euro-zone in recent months and some forecasters are predicting a move towards 1.24 versus the Dollar by the end of the year. The Euro-zone is facing a recession while the U.S economy expands at the fastest pace in two years. Global stock markets rallied yesterday with the S&P 500 index advancing through the course of the day, supporting demand for riskier assets. The Australian and New Zealand Dollars rallied after falling annual lows against the Pound but the positive sentiment was short-lived. The Pound traded up through 12.70 against the Rand in early trading this morning and bounced back above 1.5450 versus the Aussie Dollar, as tentative gains in risk appetite failed to inspire confidence. The relatively strong demand for the U.S Dollar against the Euro helped the Pound rally back above 1.21 last night, while the trade weighted index advanced to the highest level in 13-months. There was speculation over defensive demand for Sterling, as investors continue to seek a refuge from the instability within the Euro-zone. Structural vulnerabilities in the peripheral economies of the Euro-zone will continue to be an important factor, while the Pound derived further buying support from the recent positive tone of PMI releases. Last night, the British Retail Consortium reported a 1.3% increase in retail sales in the year to March. EUR/USD The Euro failed to trade above the 1.31 level against the U.S Dollar yesterday and dipped to lows in the region of 1.3050 by midday in Europe. The Euro was undermined again by a host of negative reports for the single currency with the economic data weaker-than-expected. The Sentix business confidence index posted an unexpected decline to -14.7 for April, in contrast to market expectations of a modest improvement. There was also significant selling pressure on peripheral bond yields during the day with benchmark Spanish yields approaching the 6% level for the first time in over three months, while Italian yields also rose. There was a sharp widening in yield spreads as German bund yields reached record lows on defensive demand. The Euro did manage to find support at the lower levels and briefly moved sharply higher to 1.31 with some fresh reports of sovereign buying. There was speculation of capital repatriation by European commercial banks, which may have also provided a degree of support for the Euro. There were no major U.S data releases and comments from region Fed Presidents were largely in line with recent remarks about the economy.
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