With a week almost depleted of data from the UK, last week’s stronger economic data continued to offer pound. Positive sentiment still emanating from last week’s strong GDP and retail sales report helped sterling to hold on to its gains. The euro also continues to be supported by the recently improved economic data and on the view that concerns over the eurozone debt crisis have eased. In the US, weaker durable goods orders released and a cautious outlook indicated in the Federal Reserve’s Beige Book report helped to support the US dollar.

Sterling

This week has been a quiet one in the UK with no major economic releases on the calendar. Sterling has continued to hold onto its recent gains on the back of better data out of the UK. Sterling hit a five-month high against the dollar as investors shrugged off dovish comments from the Bank of England.

US dollar

More negative data released in the US is weighing on the dollar preventing any significant rallies. Durable goods orders dropped one per cent in the month of June, which surprised analysts, who were expecting a rise of 1 per cent. There were no surprises from the Federal Reserve’s Beige Book, the US Central Bank’s measure of economic conditions across its 12 districts. While the economy has continued to pick up, growth has lost steam in recent weeks the Fed confirmed in its regional report.

Euro

The euro surrendered some of its recent gains which had taken the single currency to an eleven week high against the dollar. The main driver behind this is last Friday’s European bank stress tests that yielded generally good results. Also, German consumer confidence earlier in the week beat expectations and has eased worries about the outlook for the eurozone economy, especially now that many European countries have adopted harsh austerity steps to get their finances under control.

Japanese yen

The Japanese yen strengthened against all major currencies on the back of fears concerning the global economic recovery. This has prompted investors to unwind their risk positions for the safe-haven currency.