Sterling Recovers against a weakened Euro February 2011
February 7, 2011 Leave a comment
Sterling recovers against a weakened Euro – 7th February 2011
Sterling recovered last week from some of the losses incurred the week previous off the back of positive UK data and the Eurozone Interest Rate announcement. The Pound made steady progress throughout the week ending almost 2 Cents higher than it started.
In the UK important data of note in the early part of the week was strong manufacturing data in the form of ‘Manufacturing Purchasing Managers Index (PMI.) Broadly speaking, this is an indicator of economic health of the manufacturing sector. The result exceeded expectations and indeed was the highest reading since the survey’s inception in 1992.
Such was the strength of the reading, it over shadowed the release of mortgage approvals for January which was worse than expected and furthermore prompted renewed speculation of an interest rate rise and therefore pushed the Pound higher against the Euro.
Euro Pound Graph January – February 2011
There was more good news for Sterling on Thursday as the Services PMI showed that the services sector expanded at the fastest pace in 8 months. This was followed with UK house price data which came in well above expectation at 0.8% growth.
By this point the raft of positive data had led analysts to speculate that an interest rate rise could occur in the UK as soon as May – However, with more important data releases this week, such speculation over this matter could prove to be a little premature.
In the Eurozone the currency’s performance was stunted as expectations were dampened with the news on Thursday that interest rates were kept low at 1%. Trichet’s comments and viewpoint disappointed investors who were hoping for a much more Hawkish statement especially after inflation data earlier in the week which came out above expectation.
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