Sterling To US Dollar Rate Climbs To 4-Month High On Positive US Manufacturing Data

Published: Tuesday, 3 April 2012 09:00 BST - Written by James Fuller

STORY LINK Sterling To US Dollar Rate Climbs To 4-Month High On Positive US Manufacturing Data

The stand-out data release from yesterday’s session in the currency markets came in the form of March’s ISM Manufacturing survey in the US. The results of the survey showed that activity in America’s all-important manufacturing base expanded at a faster rate than had been anticipated last month. This is the latest in a series of encouraging US data sets, which has included three consecutive Non-Farm Payroll figures of over 200,000. Investors appear convinced that the world’s largest economy is now on the up and their increased appetite for risk throughout yesterday’s session saw the US Dollar come under sustained selling pressure. This took the GBP USD exchange rate all the way up to 1.6063 on the day, its highest level since 14th November of last year.

However, the news from the eurozone was less encouraging, taking some of the edge off market participants’ appetite for risk. Yesterday morning’s whole of eurozone unemployment numbers showed that joblessness in the region had increased to 10.8% in February. This represents the highest level since the euro was instigated in 1999, suggesting that region is labouring under the weight of heavy austerity measures in many of its peripheral nations.

Overall, however, ‘risk-on’ trading won the day yesterday, as speculators chose to ignore the bad news from Europe, instead concentrating on the positive release from the States. This saw the New Zealand and Australian Dollars come under renewed selling pressure as the day progressed, follow their bright start during Monday’s Asian session. The GBP AUD and GBP NZD pairs could be in for further upside today if this evening’s US Federal Reserve Minutes send out a go-ahead message regarding the future prospects for the global economy.

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