Sterling hits two month high against the euro to trade over 1.1850

US Dollar:

US markets are closed today for Thanksgiving:
The dollar has remained bullish after Tuesdays rally as players continue to find the greenback the safe haven place to park their funds. The drop in equities this week saw funds fly from the under pressure euro and the greenback was the currency of choice to purchase. The ongoing sage being played out on the Korean penin-sula has also kept investors nervous, with the possibility of troubles escalating which will undoubtedly push the buck higher. On top of this, there was better than expected economic data released yesterday in the US, as the governments weekly jobs report brought a bit of good news. The number of Americans filing for their first week
of unemployment benefits sunk to its lowest level in more than two years. The greenback kept its march on the euro, with the single currency capitulating, pushing EUR/USD close to going under the $1.33 handle. The dollar also kept up the pressure on sterling, as GBP/USD continues to trade under the $1.58 level.

Pound:

The pound has continued the week mixed against the majors with cable remaining under pressure, but sterling has traded higher on the euro. With the single currency plunging further into crises yesterday as inves¬tors sold off Spanish, Portuguese and Belgian government bonds in record numbers, the pound took full advan¬tage of a sell off in the euro to see the pound hit a two month high against its European counterpart. GBP/EUR traded over the 1.1850 level, hitting 1.1862 yesterday morning, slightly off that in early Thursday mornings trad¬ing session. The view on GBP/EUR is definitely against the single currency and possibly with more pressure on the way as other European countries suffer a similar fate as Ireland. This puts the pound in pole position to pos¬sibly trade higher on the euro, although their will be dips along the way as profit taking and safe haven plays come into the frame. The move lower against the dollar has come as the flight from risk to safe haven trades has seen cable fall along with EUR/USD. The pound has stayed trading under the $1.58 level which has been helped by the worrying developments on the Korean peninsula, as the typical favourites of gold and the green¬back come in favour to the detriment of the pound. Data 10.00: Inflation Report Hearings. Speaker11.00 BoE’s King

Euro:

Ireland has been left reeling after its €15bn austerity package programme was scorned by markets, and experts warned the raft of tax rises and spending cuts would not be enough to avoid debt default. Concerns were immediately raised that the Irish governments growth forecasts were widely optimistic, making it unlikely that the deficit reduction target would be hit. Standard and Poor’s, the credit rating agency that downgraded Ireland two notches on Tuesday and has threatened more action, is predicting nominal GDP to be close to flat over the next two years. All bad news for the under pressure single currency. The problem now facing the euro is where will the markets focus on next. Europe has so far survived the bailout of Greece. The financial rescue of Ireland also is manageable. Even if Portugal becomes the third country to succumb and seek aid, as many people widely predict, it is unlikely to push Europe to financial brink. But any bailout of Spain—with an economy twice the size of the other three combined—could severely stress the ability of Europe's stronger economies to help financially weaker ones, and spell deep trouble for the euro, Europe's common currency. Even though Spain, like Ireland, has adopted an austerity plan to help it avoid the need for a bailout, it still could need aid if its banking system proves frailer than the government think it is, as was the case in Ireland. No major data.

General:

• Gold continues to benefit from the flight to safety as the precious mental trades at $1,372.50 per troy ounce.

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