GBPEUR/GBPUSD

Sterling continued to decline against the Euro and USD during trading yesterday, deteriorating once again below 1.1575 against the Euro and testing key support at $1.6000 against the dollar after data released for U.K industrial production came in weaker than previously forecasted.

The report confirmed that output had fallen by 0.6% - confirming that even though the pace of contraction seems to be easing - the U.K manufacturing sector remains in decline.
A survey from the British Chamber of Commerce for Q2 published yesterday, suggested that the decline in Gross Domestic Product (GDP) during Q2 could be potentially much smaller than the 2.4% drop recorded during the first quarter.

The survey confirmed that the pace of decline in the U.K. is beginning to moderate - with an improvement in sales and a marked jump in business confidence. Leading indicators are continuing to rise - which has increased market speculation that the economy 'could' potentially return to growth during the second quarter of 2009 - However the recovery is likely to be slow paced and fragile.

In the Euro-Zone, Manufacturing/industrial production data released yesterday morning rose for a third consecutive month in a row, climbing by 4.4%.

Once again, it is a relatively light day in terms of economic data - however risk sentiment could well dominate during trading today as we approach the Q2 reporting season for the United States, and the G8 Summit meeting begins.

EUR/USD

The Euro managed to move higher against the dollar during trading yesterday, briefly trading back above resistance at $1.4000, and closing just underneath this key resistance level.

The movement was caused by an unexpected increase in German industrial orders, which increased optimism for those looking for signs of economic revival within the region. However, general concerns about the global economic recovery, and speculation that the recent optimism had been premature soon surfaced.

Talk of a possible second U.S. stimulus plan heightened these fears, helping to send U.S. stocks to a 10 week low. Safe haven support for the dollar saw EUR/USD open below $1.3900 during early morning trading.

The yen is again a major beneficiary of increased risk aversion, rising to a six week high against the Dollar and the Euro.


Data Released 8th July :

ITL G8 Summit (to July 10th)

UK 00.01 Nationwide Consumer confidence (June)

UK 00.01 GDP Estimate (3 months to May)

EU-16 10:00 Q1 GDP Revised

US 20:00 Consumer Credit (May)

Labels: daily-insight