F/X Weekly Comment

So far, so good.  Sterling seems to be establishing a base at these levels, ending the week up 70 points at 1.2330.  Not all the news was good for sterling, but as I've said a couple of times recently, the pound seems to be able to shrug off the bad news and thrive on the good. Long may that continue...

Dodgy stats for the pound

Weak UK house price figures from the latest Halifax survey barely affected the pound today. House prices apparently fell by 2.4% last month, as opposed to a rise of 2.2% the month before.  The market chose instead to focus on figures showing that sales of new cars in the UK showed an annualised increase of 3.3% last month, provided a chink of hope for sustained recovery.  The latest PMI survey from the service sector continues to show expansion at 53.3 although this was under the expected 54.4 level.

Even dodgier stats for Europe

The release of the Europe-wide Composite PMI survey set alarm sirens wailing for the future prospects for the Euro. The data revealed that the eurozone’s private sector is contracting even  faster  than had previously been thought. This took the rate to 1.2328 by the middle part of today’s trading session, and the single currency isn't expected to bounce back in the near future.  There is clear  evidence now that the eurozone’s sovereign debt problems are starting to hurt the continental European economy. A whole raft of disappointing European data releases this week reinforced this sentiment, as firstly German unemployment figures and then the PMI survey came out significantly worse than had been expected.   The worst was yet to come, however, with the release of March’s eurozone unemployment figures. These showed that unemployment in the region had rocketed to 10.9%, its highest level since records began. It appears that widespread government spending cuts and tax hikes in an attempt to balance the finances of debt-ridden eurozone states are causing European consumers to stop spending, hitting Europe’s economy hard.

Sarko Sortie

I expect that by the time you read this our charming diminutive president may now be free to 'pursue other interests'.  I do hope so anyway.  What will be interesting will be how M. Hollande manages to merge his socialist beliefs with capitalist reality.  This could be interesting, and another ace up sterling's sleeve.

What now?

Same as last week.  Still onwards and upwards for me.  1.25 here we come.  The trick here will be to work out when to press the 'buy' button, and avoid being too greedy.