The Pound made gains against the Euro while declining against the Dollar as concerns that fiscal tightening by Britain’s new coalition government could hurt economic recovery. In other news, GDP came in at 0.3 percent showing a slightly faster growth pace than initially expected. The Pound is expected to remain under pressure as the finance ministry announced 6.25 billion pounds worth of public sector spending cuts.
The Dollar made gains against the Euro and the Pound as investors flocked to the safe haven currency status of the US Dollar as global equities tumbled.
Also supporting the dollar was increasing concern over the situation in the Korea peninsula after a story broke from a South Korea news agency that North Korean leader Kim Jong-il had told his troops to prepare for combat. In other news, US consumer confidence came in at 63.3 vs. a reading of 57.7 in April. It is expected that the Dollar will continue to gain momentum as the fear in the euro zone continues to spill over into the global economy.
The Euro declined against the Pound and fell to a four year low against the dollar after Spain’s weekend takeover of a small savings bank. The Bank of Spain on Saturday said it had taken over bank CajaSur. Even though the bank is relatively small, the take over has highlighted weaknesses in the European banking sector. It is expected that the Euro will remain pressured as bearish sentiment dominates the market.
Data released 19th May
US 13.30 Durable Goods (April)
US 15.00 New Home Sales (April)
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