British Pound Bounces Back; Hits 2-day High Against Dollar
During early European deals on Friday, the British pound reversed its Asian session’s downtrend against other major currencies, driven by a rise in U.K. stocks. The pound thus climbed to a 2-day high against the U.S. dollar.
Britain’s top share index gained 0.7 percent early today, as rising crude prices fuelled strength in energy stocks, while banks and miners also gained ground as investor’s risk appetite recovered.
By 4:04 am ET, the blue-chip index was up 29.82 points at 4,282.39 after falling 0.6 percent on Thursday to close at 4,252.57. The index is down 3.6 percent this year, but is up 23.5 percent from a six year low set in March.
The British pound gained ground after hitting a low of 1.6378 against the US dollar at 1:30 am ET Friday. The pound-dollar pair is currently trading at a 2-day high of 1.6514 with 1.660 seen as the next target level. The pair closed Thursday’s North American session at 1.6370.
UK’s sterling that closed Thursday’s North American session at 0.8548 against the European currency slipped to 0.8573 at 1:15 am ET Friday. Thereafter, the pound reversed its direction and climbed to 0.8514 at 4:10 am ET, compared to 0.8548 hit late New York Thursday. The next upside target level for the British currency is seen around 0.848.
Germany’s Federal Statistical Office said in a report that the import price index dropped 10.4% year-over-year in May, compared to the 8.6% fall in the previous month. This was the highest price decline since February 1987. Economists were looking for a decline of 10.3%. On a monthly basis, import prices remained unchanged in May, after falling 0.8% in April. Economists had predicted an increase of 0.3%.
Meanwhile, the French statistical office INSEE said in a report that the consumer confidence stood at minus 37 in June, up from minus 40 in May. Economists had expected a reading of minus 39 for June.
Also, the French statistical office INSEE confirmed a 1.2% sequential contraction for its economy in the first quarter. At the same time, the statistical agency revised the figure for the fourth quarter to show a fall of 1.4% from a 1.5% contraction reported initially.
A report by France’s Ministry of Labor and Employment showed today that the number of unemployed persons increased by 1.5% or 36,400 in May from the preceding month. Year-on-year, the number of unemployed persons increased by 26.4%. During the month, there were 2,543,100 unemployed persons.
Against the Swiss franc, the British currency edged higher during today’s early deals. At 4:10 am ET, the pound-franc pair reached a high of 1.8008, compared to Thursday’s closing value of 1.7912. If the pair gains further, 1.798 is seen as the next target level. The pair is now worth 1.7939.
KOF economic think tank said its economic barometer for Switzerland rose to minus 1.65 in June from May’s revised reading of minus 1.85. Meanwhile, economists had expected the indicator to rise to minus 1.75.
The pound that touched a low of 157.01 against the Japanese yen at 1:20 am ET Friday strengthened thereafter. The pair that closed Thursday’s New York deals at 157.12 is currently trading at 157.99. On the upside, 161is seen as the next target level for the pound-yen pair.
Japan’s consumer prices dropped sharply in May compared to the year-ago period, mainly due to lower prices for utilities, transport and communication, official data showed today.
Data released by the Ministry of Internal Affairs and Communications said consumer prices fell 1.1% year-on-year in May, coming in line with economists’ estimate, after a 0.1% drop in the previous month. Consumer prices declined for the fourth consecutive month in May.
Japan’s index of all industry activity dropped 9.9% year-on-year in April, slower than a 11.9% fall in the preceding month, the Ministry of Economy, Trade and Industry said today. The index has been declining on an annual basis continuously since March 2008.
Traders are now likely to focus on the North American session, in which the U.S. Bureau of Economic Analysis is due to release its personal income & outlays report for May at 8:30 am ET. Economists estimate the report to show that personal income rose 0.2% and the personal spending increased 0.4% in the month.
At 10:00 am ET, the Reuters/University of Michigan’s final report on the consumer sentiment index for June is scheduled to be released. Consumer confidence is expected to rise in the month, with economists forecasting an increase in the index to 69 from the previous month’s reading of 68.7.
