Data released from the eurozone managed to spook investors and allowed the pound to make significant inroads as a result. Fears of a global downturn were fanned throughout and limited the euro’s ability to strengthen. In contrast to the euro, sterling was seen moving to two-week highs against the single currency and five-month highs against the US dollar as UK PMI figures showed improvement in the manufacturing with the index jumping to 10-month highs. In the US, the gloomier outlook for global growth was given some respite when ISM manufacturing figures beat market forecasts.

Sterling

Sterling enjoyed a jump to five-month highs against its rival US dollar while touching two-week highs against the euro on the back of positive data releases. The PMI manufacturing survey released in the UK jumped unexpectedly to 10-month highs. Alongside, a CBI report suggested financial services firms were looking to hire and had a more optimistic outlook on the economy. Both releases suggest the UK economy may have narrowly missed falling back into a recession and have supported sterling now that chances of increased quantitative easing measures by the Bank of England have been reduced.

US dollar

The FOMC minutes will be heavily scrutinised by investors who will try to determine whether the Fed is any closer to utilising more quantitative easing measures. Comments in February showed Ben Bernanke becoming more optimistic, yet last week the Fed chairman remained cautious on the labour market, contributing to the recent fall in USD strength.

Euro

The euro surrendered recent gains after a string of poor data released caused investors to re-evaluate. Unemployment in the union rose for the 10th consecutive time, putting the number of people out of work at 17 million, the largest amount of unemployed since 1997. Spain is increasingly forced under the spotlight after recently releasing more austerity measures and with the highest rate of unemployment in the union at 24 per cent, the markets will hope another Greek style catastrophe is not looming.

Japanese yen

The Japanese yen has taken solace from the downbeat economic data in Europe. Coupled with uncertainty over the Chinese growth outlook, investors looked to the yen as a safe haven helping claw back some of the recent losses.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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