THE pound continues to push higher after positive manufacturing purchasing managers index (PMI) figures yesterday threw further doubt on the accuracy of last weeks poor fourth quarter GDP figures. Comments from the National Institute of Economic and Social Research (NIESR) that the Bank of England may have to raise rates three times by the end of 2011 have further served to underpin the pound. We could now well see sterling make further gains against the euro. CMC Markets offers a spread on euro-sterling of 0.85441p-0.85459p.
The Australian dollar found strength yesterday as the Reserve Bank made a statement to say the global economy looks strong and investment is picking up due to higher commodity prices. Though the Kiwi dollar rallied against the Aussie over Christmas due to an interest rate increase, the rally has proven to be short-lived. New Zealand has come out with poor retail sales recently and this, coupled with rising Australian house prices in the fourth quarter, might offer some upside for the Aussie. Capital Spreads quotes AUD$1.2966–AUD$1.2976.
Last week's flight to quality for many investors served to bolster the likes of the Swiss franc as save havens were sought. However, with the Egyptian situation seemingly unlikely to spill over – and global oil supply routes unaffected too – risk appetite is picking up once again. Having tested territory below CHF1.5000 again, sterling-Swiss franc has been rallying hard since the weekend break. The current IG Index price is CHF1.5153-CHF1.5156.
Ahead of Thursday’s meeting of the European Central Bank, talk of inflation around Europe has increased the likelihood of a hike in interest rates, making the euro even more attractive. As these headlines keep driving the rates, it is becoming increasingly likely that euro-US dollar will break through resistance. Cantor Index offers a spread of $1.3766 -$1.3767.