Pound Rallies on Modest Improvement in GDP, Housing Data

US Dollar:

The greenback continued to lose ground against the majors but is holding steady against its main trading counterpart the Euro. Consumer confidence in the US improved in March as the Conference Board’s survey to increased to 52.0 from 46.0 in the previous month, and the rebound in household sentiment encour-aged an enhanced outlook for the private-sector as spending remains one of the leading drivers of growth. These are among a number of positive economic readings we have seen from the US lately but FX traders are still running the risk aversion trading model to full affect. Main data release today is the ADP private payroll re¬port, a precursor to Fridays government data. Analysts are expecting 40,000 jobs to be created which would be the first positive reading since early 2008 and would set the stage for Fridays market moving figures. EUR/USD is still hovering dangerously close to its yearly low of 1.3260 set a last week and Cable has recovered slightly but is far from bullish.
DATA US Factory orders (FEB) CHI Purchasing Managers Index (FEB)

Pound:

Sterling moved higher yesterday on the release of UK Gross Domestic Production. Forecasters were looking for a final reading of 0.3% in the fourth quarter, but were mildly surprised by a reading 0.4% easing some uncertainty about U.K. economic prospects. The main reason for the increase is largely due to consumer spending accelerating 0.4%, marking the largest gain since the first quarter of 2008, while government spending surged 1.2%. Following the GDP report, the British Pound extended its two-day advance against the Dollar, with the pair breaking the 20-day SMA (1.5055) and testing 1.51. The Pound also made good headway against the Euro surging over 1.12 to high of 1.1260 overnight although it is trading slightly lower this morning at 1.1220 on profit taking. Other data supporting GBP was the surprise news that U.K.’s nationwide house prices survey soared an annualized 8.2% during the same month. The UK housing market has been notoriously unpredictable due to sparse supply of properties on the market as homeowners are reluctant to sell and buys are struggling to obtain mortgages so we don't put to much emphasis on this data. Other news today is that Whitehall is making swift contingency plans in case of a hung parliament after the UK general election. This may include Gordon Brown remaining in power even if the Conservatives have more seats. Officials are gravelly concerned that any sign of weakness in Parliament could cause a run on the Pound.
DATA No Data

Euro:

The Single currency lost more than 0.5% against the dollar and sank to a one-month low against the U.K. pound after Standard & Poor's warned that Greece's banking system remains at risk due to the country's weak economic outlook. Meanwhile, Ireland announced plans to inject billions of Euros into the nation's belea¬guered banking system, highlighting the fragility of the recovery there. As a result, the euro lost all the ground made on last week's support package for Greece, Greek bonds were also under pressure after the bond sale failed to attract the same interest as previous issues, forcing Athens to pay a high price to fill its order books.
DATA— GER Employment Change (MAR) ITL PPI MoM/YoY (FEB)

General:

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GBP/USD	1.5104
GBP/EUR	1.1241
EUR/USD	1.3433
GBP/JPY	140.79
GBP/AUD	1.6407
GBP/NZD	2.1263
GBP/ZAR	11.0691
GBP/CHF	1.6075
GBP/CAD	1.5349
GBP/SGD	2.1051
GBP/THB	48.59
GBP/HKD	11.72 red-down; blue-up (snap shot)