Sterling has a poor day despite some positive news

Home » Foreign Currency News » Sterling has a poor day despite some positive news

Sterling fell away yesterday afternoon despite a positive early showing to end the day below £/€ 1.12 against the Euro and slipping nearer to £/$ 1.59 against the US Dollar. The positive news came from UK business owners who expect demand to increase in the coming months, prompting some speculation that the economy will gather momentum towards the end of the year.

In the Eurozone, it seems as though the crisis has been averted following the French banks generosity by trimming 30% from its repayments, lowering the rate of interest and postponing maturity. Investors were seemingly heartened that the problems of Greece have been sorted out and that global economic growth is no longer under threat.

What investors seemed to have forgotten is that even if the Greek parliament agrees the new austerity package, there is no certainty they'll be able to implement the measures. Ongoing protests in Athens and yesterday's general strike were another reminder that it is not a done deal.

The markets confidence a solution for Greece has found saw stock markets moved higher, the price of oil edged upwards and the demand for the US Dollars' safe-haven status waned. 

Today's data calendar features Q1 GDP and current account figures from the UK and consumer confidence data from the US. The UK figures will be of some interest to the markets, although the previous estimates of 0.5% q/q GDP are expected to be confirmed. 

Therefore it is the current account that should generate the greatest interest. The deficit forecast to narrow sharply from Q4 '10 to be less than half that of Q1 last year. As for the US, a small rebound in consumer confidence is forecast.