The Pound made gains against the Euro and the Dollar following an ease in risk aversion but found further gains capped amid political uncertainty ahead of upcoming elections in May. Standard and Poor’s also affirmed the country’s AAA rating but kept its negative outlook citing concerns over the country’s public finances. Due to this, the pound is likely to remain under pressure until further clues over the outcome of elections and resolution of country’s messy debt situation is known.
The Dollar declined against the Euro and the Pound yesterday as the greenback has continued to be affected by global risk trends. The Dollar has maintained its appeal as a “safe haven” status while concomitantly garnering interest amongst speculators for interest rate yield potential. With risk and rate speculation conspiring to underpin the dollar, its recent inverse correlation to the US equities may be temporarily suspended as both the greenback and DJIA (10,895.50) are on track to hit their best levels year-to-date. With key event risk on the economic horizon this week, expect volatility in both FX markets and US equities.
The Euro declined against the Pound while making gains against the Dollar after European confidence beat forecasts by economists improving to 97.7, the highest level in almost two years. Although pressure on the Euro has eased with accord on a Greek rescue plan, the Eurozone will have to show concrete steps in shoring up its budgetary issues to stabilize the single currency longer term.
Data released 30th March 2010
UK 09.30 Final GDP (Q4)
US 14.00 Case Shiller House Prices (January)
US 15.00 Consumer Confidence (March)