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Euro holds gains against the Dollar

Sterling had a relatively quiet day yesterday as there were no major figures out  and the markets just played out the last day of the month. It traded a very tight range against the Euro finishing about 20 pips lower at 1.1440 and lost  about 60 pips against the Greenback  to finish around the 1.6455 area. The only news of note yester¬day came from outgoing MPC member Andrew Sentance who warned that there is  a ‘ big risk ‘ emerging to the credibility of the Bank of England in their fight against ever increasing inflation.  He also warned that there was a danger that the fall in Sterling would produce long lasting  inflation effects via effects on competition and firms pricing power, given the openness of the UK economy to international trade. He warned that the value of Ster¬ling had to be taken very seriously if we were to avoid the effects last seen in the 1990’s.
Data: 9.30am Manufacturing PMI Expected 54.2        

The  Euro  rose to a three week high against the Greenback as optimism spread across the markets that Euro¬pean officials will approve additional assistance for Greece. The Luxembourg Prime Minister Jean-Claude Juncker said that the regions leaders will decide on a new aid package by the end of this month and have ruled out a total restructuring of Greece’s debt. Germany may also stop demanding an early rescheduling of bonds.
The markets believe that if these reports are correct then it removes one of the difficulties to achieving an agree-ment towards further financial assistance to Greece. On the back of this news the Euro moved to 1.4424 against the dollar, the highest level seen since May 9th. It has held its gains overnight and we start today's London ses¬sion at 1.4430.                                                                                                                                

Data 10.00: No major data today –ECB President Trichet speaks

Another poor day for the dollar yesterday against the euro and as we sit today there is little light at the end of the tunnel.  Market releases today are expected to paint a gloomy picture as reports are expected to show that U.S. Companies hired fewer workers and manufacturing cooled. The Greenback was not helped either by their friends at Goldman Sachs. In a report last week they cut their economic growth forecast for the second time in a month only to follow it up a few days later to say that “ we already see downside risk to that estimate “. That is one way of kicking a man when he's down. They see the economy struggling at a 3% pace in the second quar¬ter down from 3.5% just three weeks ago and 4% at the start of the year.                 
Data 1.15PM Non-Farm Employment Change 3.00pm manufacturing PMI

• The Australian dollar rose after the statistic’s bureau said the nation’s gross domestic product  contracted 1.2% in the first quarter from the previous three months ( against expectations of  a 1.1% decline ).  The GDP was not as bad as some in the market were expecting and therefore we could see a bit of a rally for the Aussie.


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GBP/USD 1.6465
GBP/EUR 1.1420
EUR/USD 1.4425
GBP/JPY 134.00


GBP/NZD 1.9980
GBP/ZAR 11.1600


GBP/CAD 1.5935
GBP/SGD 2.0250



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