Euro Market Update 16 June 2009
Market Update - GBP EUR
The latest economic data from the UK suggests we may be in the midst of an economic recovery, anaemic yes, but indicators are moving in the right direction. Manufacturing was slightly ahead in April, and the pace of house price decline slowed again. Not much to celebrate in itself, but Sterling has already decided things are getting better, rising to new highs against the Euro last week, and making further progress yesterday. It's quite typical of currency markets to accurately predict economic turning points well in advance of the data. Markets are an effective voting machine, weighing up the opinions and actions of millions of people in real time, and lately, most people have held the opinion that things are bad, but that the pound has been unfairly punished. That sparked the beginning of a Sterling revival from New Year onwards, and that recovery is now starting to accelerate as little pieces of positive data start to confirm what we already suspected, not just that the outlook for sterling isn't as dire as we thought last year, but more importantly that the Euro deserves a basing too. A dire industrial production figure and a credit rating downgrade for Ireland gave us the required ammunition last week. Thank you Ireland !
In recent reports we've talked about the crucial technical resistance at 1.1575, which has now been overcome. This gives us room for increased optimism considering there are no new barriers until 1.2150. A rally to that level or above would certainly get many Brits back in the foreign holiday mood
The latest economic data from the UK suggests we may be in the midst of an economic recovery, anaemic yes, but indicators are moving in the right direction. Manufacturing was slightly ahead in April, and the pace of house price decline slowed again. Not much to celebrate in itself, but Sterling has already decided things are getting better, rising to new highs against the Euro last week, and making further progress yesterday. It's quite typical of currency markets to accurately predict economic turning points well in advance of the data. Markets are an effective voting machine, weighing up the opinions and actions of millions of people in real time, and lately, most people have held the opinion that things are bad, but that the pound has been unfairly punished. That sparked the beginning of a Sterling revival from New Year onwards, and that recovery is now starting to accelerate as little pieces of positive data start to confirm what we already suspected, not just that the outlook for sterling isn't as dire as we thought last year, but more importantly that the Euro deserves a basing too. A dire industrial production figure and a credit rating downgrade for Ireland gave us the required ammunition last week. Thank you Ireland !
In recent reports we've talked about the crucial technical resistance at 1.1575, which has now been overcome. This gives us room for increased optimism considering there are no new barriers until 1.2150. A rally to that level or above would certainly get many Brits back in the foreign holiday mood