The British Pound gained some momentum yesterday after reports revealed that Britain’s manufacturing sector improved in March and mortgage approvals increased in February. However, gains are restricted due to slowing UK inflation and a gloomy market attitude. For the time being, investors expect the Bank of England to decrease interest rates by June, up from 15% at the beginning of March.
The euro continues to fall against a basket of currencies, after German inflation fell slightly more than predicted in March, reaching its lowest level in over three years. Indeed, yesterday’s statistics fuelled anticipation that the European Central Bank might slash interest rates. Investors are looking forward to the advanced Eurozone inflation data for March, which will provide further momentum.
In European trade yesterday, the US dollar stabilised near its recent multi-month high as robust economic data weighed on hopes of early Fed rate reduction. Indeed, additional signals of U.S. economic strength have caused investors to reduce their expectations of early interest rate cuts by the Federal Reserve, so strengthening the dollar.
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