EURO/GBP - 1.149
US$/GBP – 1.593
CHF/GBP – 1.540
CAN$/GBP - 1.614
AUS$/GBP – 1.634
US$/EURO - 1.370

Sterling recovered to hit a 2 month high against the US dollar yesterday after stronger than expected UK services sector data and expectations over further monetary stimulus in the USA. Sterling hit a high of $1.5928/£1 on the day as growth in the services sector unexpectedly jumped off of August’s 16 month lows. Analysts were keen to point out that this was not the reversal of the UK’s woes, and as such, any return to favour from the US dollar will see sterling slip back down. Sterling was not so successful against the euro, as euro buying in Asia helped strengthen the single currency. Out tomorrow there is key data released on house price data which is expected to show a slight increase on last month. The data could prove vital ahead of Thursday’s Bank of England interest rate meeting so speak to one of the team now to protect yourself.

In the Euro zone, the last 2 days has seen strong demand for the euro from Asia. There seems to have been a shift from the use of the US dollar as a global reserve currency to the use of the euro. As concerns grow over the state of the US recovery, this seems to have caused the shift and as a result is supporting the euro. In terms of data, retail sales slipped unexpectedly last month to -0.4%, but the services PMI data came in better than expected. Out today, there is final GDP data for the quarter and German factory orders for the month. Speak to one of the team now to prevent yourself losing out.

In the USA, concerns still remain over the widely expected fresh monetary easing that is expected over the next few weeks. As a result, the US dollar fell to the lowest level against the euro in 8 months hitting a session high of $1.3851/1. Combined with the diversification of currency holdings by Asian banks, it was a poor day for the US dollar. US data showed that services sector activity improved slightly more than expected in September which helped slightly, but the overriding concerns over further Quantitative Easing prevailed. Out today, there is the first Non-Farm measure of the week. Speak to a trader now to ensure you take advantage of any large movements.

Elsewhere, the Australian central bank kept interest rates on hold despite being expected to raise them to 0.25% for the first time in 5 months. In addition, the Bank of Japan unexpectedly cut interest rates to help devalue the Japanese yen and manage the value of their exports which have become prohibitively high after the yen hit a 15 year high against the US dollar. Speak to one of the team now about the challenges ahead over the next few months.

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