Sterling holds firm following last week’s losses

Home » Foreign Currency News » Sterling holds firm following last week's losses

Yesterday saw Sterling take another nose dive early on against the US Dollar until sellers ran into support at £/$ 1.5965 and we virtually settled back where we started at the close of play. The reverse was true against the Euro, as investors wondered about the sustainability of recent Euro gains.

Sterling also managed to regain some of the substantial losses it suffered last week against the commodity currencies. Against the Australian dollar it gained a cent and nearly a cent and a half against the New Zealand.

What all this suggests is that driving Sterling much lower against the majority of the major currencies may prove difficult. The caveat is if the Bank of England are more reluctant to raise interest rates than the markets think. If this is the case, it could have a negative effect on sentiment towards Sterling during the second quarter of 2011. Equally though, the European Central Bank may be forced into a rethink given the recent political and economic developments in some of the smaller Eurozone economies.

Sterling was able to shrug off yesterday's poor data too; the Land Registry said the average house price fell by -0.8% to £162,000 in the year to February.

Elsewhere, US personal income and spending rose by 0.3 on the month while the savings rate declined from 6.1% to 5.8%. The inference is that US consumers are dipping into their savings to cover daily expenditure. New Zealand recorded a smaller than expected $194 million trade surplus in February

Today see's the release of the final estimate of Q4 GDP from the UK and UK lending figures. UK GDP data has been very disappointing, and there has been little to suggest any upward revision to the 0.6% figure released in February and therefore, it is not likely to be Sterling positive.

In the US, the Conference Board consumer sentiment figures for March are released at 15:00 GMT.