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 Following on from last week, the Pound declined for a fourth consecutive day against the U.S Dollar on Thursday, as a report yesterday showed that growth in UK services industries slowed by more than initial forecasts in April, while a separate report from Nationwide confirmed that house prices fell in April. The UK currency slipped back towards pivotal support in the region of 1.6170 against the Dollar, as the services index dropped to 53.3, from 55.3 in March. The Pound remained broadly unchanged against the Euro and the Australian Dollar, however, as the report showed that growth in services was still well above the line that would indicate contraction. There is speculation that the GDP figures will be revised higher for the first quarter and the data, although not ideal, doesn't do anything to discourage that. The Pound also stood firm as the business expectations component of the services data rose to the highest level in 25-months, as hiring intentions also strengthened. Although there was still a high degree of uncertainty, the net result from last week's surveys on manufacturing, construction and services has reduced expectation of further quantitative easing, which will help support the Pound. The Pound bounced back towards 1.62 against the U.S Dollar towards the end of the week, as support held strong at 1.6170. Bank of England governor Mervyn King said that the economy isn't yet "back to health" and will need the support of low interest rates "for the time being". The BoE is not expected to tighten monetary until the fourth quarter of 2013, as inflation expectations slide. The Euro continued to decline against the U.S Dollar, as the ECB held interest rates unchanged and the Chairman Mario Draghi hinted that further stimulus measures may be introduced to counter the debt crisis. The Pound has risen through 2.00 against the New Zealand Dollar, after unemployment in NZ surged to the highest level in almost two years. The Pound has risen through the highest level in 6-months against the Australian Dollar, trading above 1.5750, as investors increased bets that the Reserve Bank will cut interest rates to an all-time low, after officials reduced economic growth and inflation expectations. The Aussie Dollar recorded its biggest weekly loss this year and bond yields fell to a new record low. The decline in risk sentiment has also contributed to a decline in the higher-yielding currencies like the New Zealand Dollar and South African Rand. The U.S monthly employment report showed that employers added fewer workers than forecast for April, while the jobless rate unexpectedly declined. The report adds to recent concern that the U.S economy is losing momentum and traders subsequently flocked to the safest assets. The Pound recorded a third weekly advance against the Euro, as France and Greece held elections and there is a high degree of uncertainty about the region's commitment to austerity measures. There was a lack of fresh domestic news with the UK market closed for the Bank Holiday but there was further speculation that there would be defensive inflows due to Euro-zone stresses. In this environment, there was a reduced focus on UK economic data, but there would still be the potential for markets to lose confidence given the underlying vulnerability and deficit pressures. The Bank of England meets this week and all eyes will be on the midday announcement on Thursday. The expectation is that the MPC will leave policy on hold, as last month's minutes revealed a more hawkish stance than expected. The market is now of the view that the BoE is unlikely to commit to any further quantitative easing. EUR/USD The Euro encountered strong resistance close to the 1.3160 level ahead of the ECB meeting and drifted lower following Draghi's comments. His reference to downside risks to economic growth has spurred speculation that the ECB will introduce some form of monetary stimulus to improve confidence. Draghi also stated that there had been no discussion surrounding specific interest rate cuts, which is somewhat surprising given the weak tone of recent economic data. The impact of the ECB press conference was to essentially dampen expectations of a near-term cut in rates, which helped underpin the Euro to a degree. There were still political uncertainties surrounding Sunday's French and Greek elections with fears that the pro-austerity Greek parties would not be able to secure a majority vote. There was no surprise in the French ballot with Socialist party's Hollande winning against Sarkozy with around 52% of the vote. In Greece, the governing coalition party lost substantial support at the election with New Democracy winning the most number seats and have the first opportunity to form a government. A majority of Greece still want to retain the Euro, but there is strong opposition to austerity measures. Prolonged uncertainty will only serve to increase fears surrounding a forced Euro exit for Greece and that will tend to weaken the Euro even more. 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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