Pound Down Against USD, AUD & NZD Ahead Of Tomorrow?s Bank Of England Policy Announcement

Published: Wednesday, 3 April 2013 15:00 BST - Written by David Woodsmith

STORY LINK Pound Down Against USD, AUD & NZD Ahead Of Tomorrow?s Bank Of England Policy Announcement

With the extraordinary situations in Cyprus and Italy having cooled in recent sessions, appetite for risk has returned to the market in a major way over the past 24 hours. Yesterday evening’s market close in the US saw both the broad-ranging S&P 500 and the narrower large cap Dow Jones both close at new record levels in the US. The improvement in American stocks was partly driven by yesterday afternoon’s positive US Factory Orders data for February, which revealed a healthy increase of 3.0%.

The marked improvement in risk appetite has seen the commodity-driven Australian and New Zealand Dollars record healthy gains across the board. The Pound to New Zealand Dollar exchange rate (currency : GBP NZD) has tumbled to a new multi-year low of 1.7902 in the early part of today’s session, while the Pound to Australian Dollar exchange rate (currency : GBP AUD) has remained under the cosh and has spent the majority of the day in the lower end of the 1.4400s.

In the past, such a willingness from inventors to get involved in risk-laden assets would have caused a weakening of the safe-haven US Dollar. However, the Greenback appears to have avoided any sustained selling pressure since the markets re-opened for business after the Easter break yesterday. The Pound to US Dollar exchange rate (currency : GBP USD) remains lodged in the lower part of the 1.5100s and there appears little possibility that this will improve ahead of tomorrow lunchtime’s bank of England monetary policy announcement.

The prognosis for Sterling remains bleak, following this morning’s weaker than anticipated Purchasing Manager Index survey for Britain’s construction sector. The gauge of activity showed that the UK’s building sector remains firmly in contraction.

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