The pound ended on a high against a basket of currencies. A negative consumer confidence reading did little to stem risk appetite and improved sentiment towards the pound in financial markets. The pound was able to reach four-week highs against the euro and over five-month highs against the US dollar as the latter remained under pressure. Like its sterling counterpart, the euro continued to benefit from better than expected data and risk appetite, however, the single currency suffered a blip as rumours of a downgrade to Spain’s credit rating and more strikes in Greece over proposed government austerity measures made traders uncomfortable.

Sterling

Sterling hit five-month highs against the dollar, with improved risk approved risk appetite in the broader markets coupled with better than expected data readings keeping the local currency well supported.

US dollar

The US dollar ended down against most major currencies following the run of recent weak data out of the United States. Last week saw a drop in both durable good figures down by one per cent and retail sales down by 0.6 per cent, suggesting a decline in consumer sentiment and spending power. A fairly poor week of releases was capped with a fall in Q2 GDP from the previous quarter. However, the drop was largely expected and still showed a healthy level of growth at 2.4 per cent. This did little to help the under fire dollar which slumped against most currencies as risk appetite abounded.

Euro

The euro had a good week against most major crosses following the better than expected results from the European Union’s much vaunted banking stress test. The positive results of this, combined with improved economic data in the eurozone, saw the single currency continue to rise.

Japanese yen

Data released in Japan was very mixed. It saw retail figures rise for the sixth consecutive month; in contrast, trade figures showed export growth slowing for the fourth straight month. Inflation data also continued to reveal deflationary threats, but the yen is being led by broader market sentiment rather than actual economic data.

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