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 rallied to the strongest level against the Euro since November 2008, while the UK currency also made gains versus the majority of the 16 most actively traded currencies, after the Bank of England elected not to increase quantitative easing this month, despite the UK economy suffering a double-dip recession. UK government bonds fell as policy makers maintained asset purchases at £325 billion, while keeping the interest rate on hold at 0.5%. There was some speculation that the Central Bank could react to the recent growth figures by increasing stimulus measures to support the economy. That still remains a possibility if the recession is deeper than first anticipated but the Pound gained some relief following the announcement. The UK currency has weakened against the higher-yielding currencies, amid a general improvement in global risk appetite. UK stocks advanced on Thursday with the benchmark FTSE 100 Index up for the first time in three days, which followed an earlier rise in Asian stocks. The Australian and New Zealand Dollars both bounced back from their recent lows against the Pound but with concerns in Europe far from easing, it's unlikely that the injection of confidence will last. The latest UK manufacturing data recorded a rebound of 0.9% for March following a revised 1.1% decline for the previous month. The report will fuel optimism that the decline in economic growth during the first quarter will be revised higher over the coming weeks. The latest NIESR GDP growth estimate remained very subdued, however, with a reading of 0.1% for April following a revised 0.2% decline the previous month. The data largely paled into insignificance through the day, as external factors continued to dominate. There was still evidence of defensive demand for the Pound as an alternative to the Euro, which protected Sterling from losses. The UK currency is likely to continue the upward swing against the Euro, while the political and economic uncertainties in the Euro-zone escalate. The Pound declined against the U.S Dollar on Friday, extending a second weekly decline, as global risk appetite weakened once more leading into the weekend, led by a decline in global stock markets. The UK currency traded back through 1.61 versus the Dollar and also lost ground versus the Euro, falling back from the highest level since November 2008. An industry report showed that UK consumer confidence dropped last month, as the UK economy succumbed to a double dip recession during the first quarter. The Pound declined for the first time in six trading days against the Euro, as the UK economic outlook worsens and raises the prospect of further stimulus to be introduced by the Bank of England at some point. The Office of National Statistics stated that there had been a downward revision to the first-quarter construction output data. That has increased concerns that the overall GDP data for the first quarter will also be revised lower, which had a significant impact on sentiment. Markets will be cautious ahead of the Bank of England quarterly inflation report on Wednesday. EUR/USD The Euro remained under the significant 1.30 level against the U.S Dollar, as markets lacked the impetus to break out from narrow ranges. After failing to form a government, the SYRIZA coalition in Greece handed the baton over to Pasok who came third in the election result. That just gives some indication over the political circus engulfing the nation and there is doubt whether any semblance of credible government can be formed. The Euro rallied back to 1.2950 against the Dollar on Friday, but gains were generally few and far between, as underlying sentiment remained negative. There was still no agreement to form a government in Greece, as SYRIZA refused to join an administration and the President held emergency talks over the weekend in an attempt to form a national unity government and keep Greece in the Euro. There were reports this morning that Germany would be prepared to let Greece leave the Euro-zone. There were also fears surrounding the Spanish banking sector with doubts whether the government recapitalization plans would be sufficient to underpin the sector. In the U.S, a gauge of consumer confidence increased to 77.8 for May, from 76.4 previously, which was the highest level since early 2008. 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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