The Pound managed to bounce back against the Euro on Thursday afternoon when Jean-Claude Trichet failed to comment on how the ECB would be raising rates in the coming months after the widely expected increase next month. Trichet used key wording such as “extreme vigilance” in his speech, which is a sure sign that a rate rise is round the corner.
After slightly disappointing comments from Trichet the money markets immediately lost confidence in further rate rises and sold off the euro. The markets have already factored in that the ECB will raise the borrowing rates by 0.25% in July and now the possibility of rate rises after this is shady the euro has weakened.
Sterling has put up a poor performance against every other currency apart from the euro today. The Bank of England are still refusing to raise interest rates and we will have to wait 2 weeks until the MPC minutes are released which will shed further insight into what the BoE are thinking.
The Kiwi & Aussie Dollars are still trading well, especially against the Pound where we saw a loss of almost 2% against the New Zealand Dollar yesterday. Although the central banks have kept interest rates on hold this week, news from New Zealand that the horrific natural disasters in Christchurch haven’t damaged the economy too badly has really given the New Zealand Dollar a boost.
This morning Sterling had lost ground against most of the majors and was trading around 1.1220 against the Euro as investors were getting ready for very poor UK industrial data. The figures released at 09:30 were worst than expected however Sterling did gain after a small dive.
Data is light for the rest of today and investors are now looking toward the UK GDP estimate which is to be released at 15:00 GMT+1 this afternoon. This is key data as it will help decipher the amount of growth that is expected in UK which in turn could point to the positive revision of interest rates.