Good start to the week for sterling
Currencies Direct November 9th 2009 - < 1 minute read
The pound is off to a flyer in particular against the USD hitting 1.68 and pushing to 1.12 against the EUR. Some attention in the markets is focusing on the Kraft/Cadbury developments which is sterling supportive in relation to M & A flows. EUR/USD is also testing the 1.50 level again this morning; Euro zone investor confidence has come in much better than expected with the highest reading since June 2008. GBP/EUR struggling to gain further due to the EUR strength against the USD.
Over the weekend the G20 agreed a new framework aimed at re-balancing the global economy and will present detailed plans by the end of Jan. In the meantime the US dollar is weak and this is leading to a stronger euro and Yen; the IMF have also noted that the USD is still overvalued raising concerns that the USD could weaken further. Targets will be for the euros to hold above 1.50 and GBP/USD to push towards 1.70.
On Friday the non-farm payrolls for the US slipped by a worse than expected 190k and the unemployment level hit 10.2%. This was not good news for the US economy in the short term, although the market may still look forward to a slowly improving employment sector. It was not enough to turn the market into risk aversion and USD strength.