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Not much movement overall yesterday on Sterling as the markets paused on selling the pound. This morning we have in fact made some gains back and as we stand we are holding just above the key 1.10 level and 1.50 on GBP/USD. The 1.50 level on GBP/USD is a crucial level to hold above and will help to steady the ship and prevent further selling pressure. This morning we have seen UK PMI data come in much stronger than expected rising to 58.40 compared to the 55 expected and giving the best reading for over 3 years. On top of this consumer confidence rose to 80 and a 2 year high as consumers look ahead to a brighter 2010 for the UK economy. The good data this morning was a huge breath of fresh air for sterling giving it a welcome break from the selling momentum.

EUR/USD has picked up this morning beyond 1.36 following the leaked news of an austerity package for Greece totalling 4.8 billion euros. There is still uncertainty on the level of support that Greece will receive from the EU and the Greek PM tactically said that the cabinet may turn to the IMF if the EU does not give support- nice move…if we get further clarity on the level of EU support then this should lift the euro further. In addition it will help lead to selling pressure on USD and the JPY and hopefully boost the pound as confidence improves.

The Bank of Canada yesterday did everything apart from actually raising rates, thus cementing their previous comment that they preferred to wait until the summer before actually tightening officially. The CAD strengthened on the accompanying bullish statement and with the AUD, looks set to be a star performer, certainly for the 1st half of 2010.

Discuss on this on the Currency Exchange Forum