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Sterling reaches fresh euro and dollar highs

Sterling broke through more resistance levels yesterday reaching fresh highs of 1.2310 against the euro and 1.6300 against the US dollar before weakening in the afternoon. 

Currency rates - May 1

EURO/GBP - 1.2232

US$/GBP - 1.6212

CHF/GBP - 1.4698

CAN$/GBP - 1.6022

AUS$/GBP - 1.5706

ZAR/GBP - 12.569

JPY/GBP - 129.28

HKD/GBP - 12.5787

NZD/GBP - 1.9911

SEK/GBP - 10.898

AED/GBP - 5.962

US$/EURO - 1.3252

INR/GBP - 85.47

Manufacturing Purchasing Managers' Index (PMI) figures for April released today will lead the UK's economic calendar this week and should give some bearing on the state of the UK's economy following last week's surprise first quarter GDP reading.

The euro had a poor start today as Spanish GDP data released for the first quarter confirmed what many people had expected, that Spain was now back in recession. Furthermore, Standard and Poor's (one of the big three credit rating agencies) has now downgraded 16 Spanish banks.

The US dollar performed fairly well today recovering from early losses as personal income and spending rose last month and risk aversion drove the market. The Institute for Supply Management (ISM) manufacturing PMI indices data is released today and several member of the Federal Open Market Committee (FOMC) are also speaking who may provide some more light on the probability of further quantitative easing being implemented.

Elsewhere, the Canadian dollar was one of the worst performing currencies yesterday as data released showed that the economy contracted by 0.2% when a 0.2% growth had been anticipated. The Japanese yen also performed well yesterday due to its safe haven status in a risk adverse market. The Reserve Bank of Australia surprised the market by cutting interest rates by 0.5% when the expectation was for a 0.25% cut as they highlighted that the economy was weaker than forecast. The Australian dollar has lost ground as a result.

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