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 continued to advance towards the highest level in 19-months versus the Euro, while the UK currency also pushed towards a high just above 1.5950 versus the U.S Dollar, after a report from the Office of National Statistics confirmed that inflation accelerated in March for the first time in six months. Consumer prices rose 3.5% from a year earlier, up from 3.4% in February, despite expectations that the rate would remain unchanged. The increase in oil and energy prices is probably responsible for the modest increase and it will be a blow to policy makers who by-and-large have staunchly conveyed that inflation will fall towards the 2% target this year. Slower inflation would give consumer confidence a boost and help the economic recovery gather momentum this year. Faster inflation may convince policy makers that further quantitative easing may be required over the coming months but at this stage the Pound seems unperturbed by such suggestions. The Euro made gains against the Dollar as a report showing that German investor confidence rose to a two-year high, which increased risk appetite and weakened demand for the U.S Dollar as a haven. The Pound found support on dips towards 1.5850 against the Dollar and rallied sharply to a high just above 1.5950. Although the resilience in consumer prices will be a concern to policy makers, the state of demand is likely to be the dominant influence on monetary policy and will take priority over inflation if there are renewed concerns surrounding the economic outlook and threat of a recession. The International Monetary Fund stated that the Bank of England did have the scope for further relaxation on monetary policy. The UK currency continued to derive defensive support from the stresses in the Euro-zone and held above 1.21 last night. The wider gains in stocks worldwide also helped underpin the Pound through the improvement in risk appetite. The focus this morning will be firmly fixed on the minutes from the Bank of England's April policy meeting. The nine-strong committee decided to hold interest rates and asset purchases unchanged this month but the minutes this morning will reveal whether David Miles and Adam Posen continued to vote for further quantitative easing and break rank for a second month. EUR/USD The Euro found support in the region of 1.31 against the U.S Dollar and rallied to challenge resistance levels in the region of 1.3150. The German ZEW index was stronger-than-expected and commented that there had been no noticeable deterioration in confidence for the month. There was still a mood of caution and the Euro-zone inflation data record a small increase to 2.7%, from 2.6% previously. There was another rise in Spanish bond yields in the latest Treasury bill auction, but there was an increase in investor demand, which helped ease fears surrounding capital markets and the banking sector as a whole. The government also attempted to take a positive tone surrounding structural developments and the outlook for the economy. In the U.S, the latest housing data recorded a decline in the number of new builds and there was a sense of unease over a slowdown in the sector, although permits rose to a 4-year high. There was no change in industrial production for the month, which was weaker-than-expected. Despite the improvement in German investor confidence and risk appetite, the Euro was unable to sustain its advance and consolidated just below 1.3150 last night. If you need any further assistance, or require a live dealing quote - please do not hesitate to contact me on 01736 335250 or send an email to info@torfx.com Regards,
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