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 maintained its recent gains against the Euro and the U.S Dollar yesterday, remaining above 1.22 and 1.61 respectively, while the UK currency also took advantage of renewed weakness in the Australian and New Zealand Dollars. There is widespread speculation that the Reserve Bank of Australia will cut interest rates again during the next monthly meeting, while concerns over the Chinese economy has weighed heavily on currencies in that region. The latest monthly release recorded an increase in the government net borrowing requirement to £15.9 billion for March, from a revised £9.9 billion the previous month. The government met its budget target for the fiscal year at 8.3% of gross domestic product, despite the higher-than-expected March deficit. Net government debt increased to 66% of GDP, which was the highest level on record. Nonetheless, the fact the government met its budget target for the year means that the UK may avoid a cut in the AAA credit rating, for now at least. The Pound initially held strong against the Euro and pushed to fresh 20-month highs beyond 1.2250. The UK preliminary GDP figures will be watched very closely this morning with particular uncertainties surrounding this release given the recent unexpected decline in construction. The Pound should still prove broadly resilient in the short-term given the potential for defensive inflows from the Euro-zone debt crisis, as political and economic tensions continued. The GDP figures this morning are expected to show that the UK economy escaped a technical recession in the first quarter with the market expecting modest growth of 0.1%. Although the economic recovery is struggling to gather momentum, the recent economic reports point to solid growth in manufacturing and service sector growth. In the unlikely event that the data this morning is less than what's anticipated, the Pound will come under severe downward pressure against the majority of the major currencies. EUR/USD The Euro was again confined to relatively narrow ranges on Tuesday with markets unable to break major resistance levels, though the currency maintained a generally robust tone with support on dips towards the 1.3150 area. There were a series of relatively small scale Euro-zone bond auctions, which provided some net support for the Euro. There was solid demand in the latest Spanish bond auction, while there was a decline in Dutch yields, which eased fears over the impact of political stresses. In the U.S, the latest consumer confidence data was slightly weaker-than-expected with a small decline to 69.2 from a revised 69.5 the previous month. Reported new home sales declined sharply to an annual rate of 328,000 for April. The Case-Shiller house price index recorded a 3.5% decline in the year to March, from 3.8% previously. Market conditions were inevitably subdued ahead of Wednesday's Federal Reserve meeting even though the overall consensus is that there will be no change in policy. Markets remained on high alert for comments from Fed Chairman Bernanke for any hints on future policy shifts at the June meeting. 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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