Sterling strengthens due to improved UK data
Sterling strengthened by 0.4% against the US dollar yesterday hitting $1.6534/£1- it was helped by positive data that showed an improvement in British factory orders in August.
Sterling strengthened by 0.4% against the US dollar yesterday hitting $1.6534/£1- it was helped by positive data that showed an improvement in British factory orders in August.
Currency rates - August 24
EURO/GBP - 1.1436
US$/GBP - 1.6503
CHF/GBP - 1.3060
CAN$/GBP - 1.6321
AUS$/GBP - 1.5743
ZAR/GBP - 11.9068
JPY/GBP - 126.40
HKD/GBP - 12.8704
NZD/GBP - 1.9890
SEK/GBP - 10.4572
US$/EURO - 1.4420
Although this had minimal impact on the currency, had this come in lower, it is likely that it would have pushed sterling lower. The fact that other currencies are not appealing to investors is helping sterling gain ground - especially against the euro and US dollar. We are likely to see sterling gain further if CBI retail sales and an estimate of second quarter GDP are positive, when data is released later this week.
In the euro zone, the single currency rallied against the US dollar and sterling after stronger than expected German manufacturing data. Although a separate industry report indicated German investor confidence decreased in August, it was overlooked by investors. Europe's debt and banking crisis is still at the forefront of many investors' minds with speculation that the European Central Bank may soon have to adopt monetary easing of its own.
In the USA, the US dollar weakened against a most currencies yesterday as manufacturing data from Germany and China came in better than expected. The dollar fell against the Swiss franc and New Zealand dollar. US new home sales in July came in lower than expected with purchases falling to 0.7%, the lowest level in five months. Investors are waiting for Friday as there is speculation that a key central banking retreat will see Federal Reserve Chairman Ben Bernanke announce a fresh round of monetary easing that would see the US dollar weaken.
Elsewhere, better than expected Chinese factory data slightly eased global worries and helped raise stocks which in turn helped global markets. The Australian and New Zealand dollar gained from this on improved risk appetite. South African bonds also strengthened for a seventh day with expectation that the central bank will push for an interest rate hike soon.
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