Sterling instantly began its rally at 9:30am this morning on the release of the second quarter GDP data. The figure was expected at 0.6% but came in nearly twice as high at 1.1%. Sterling has not looked back since.

The pound is now trading at new highs for the week against the US dollar and the Euro. The UK economy seems to be picking up at a greater pace than its counterparts.

The result today reflects the fastest expansion for 4 years for the UK economy lead by manufacturing, services and construction.

Markets are awaiting the results of the European stress tests expected to be released at 5pm UK time. The EU regulators are examining the strength of banks to determine if they can survive potential losses on sovereign bond holdings. They are hoping the results will reassure investors about the health of the financial institutions. The Euro has been under pressure throughout the day against sterling and the US dollar. This afternoon the pound is back above 1.20 against the Euro.

Friday 23 July 2010, 04:10pm

This morning sterling has continued to rally as unemployment falls. Jobless benefit claims has dropped to their lowest level in a year. This is a positive sign, the UK economy is beginning to pick up pace.

Although it may appear the labour market is beginning to show signs of improvement, investors should be cautious. The new government has begun to implement austerity measures, public sector job losses will soon begin to filter through. It is possible we may see further deterioration in the labour market in the coming months.

Sterling rallied on Tuesday as UK CPI came in at 3.2% in June and year on year CPI stayed above the 2% target. The rally was the result of investor speculating the Bank of England will be pressured to raise interest rates earlier than expected.

This morning cable has broken above the 1.52-1.5240 resistance zone. Against the Euro, the pound looks like it has found some support around the 1.19 level.

Wednesday 14 July 2010, 10:12am

As the week draws to a close market sentiment remains poor. The US dollar has been sold to an 8 week low against sterling on speculation that the US economic recovery is slowing. Both Sterling and Euro have gained against the US dollar. US economic data is not helping the situation, the pressure is back on manufacturing whilst jobless claims remain buoyant.

Payrolls in the US fell 125,000 in June for the first time this year. The pace of hiring indicates it will take years for the US to recover the more than 8 million jobs lost during the recession. This will clearly have a knock on effect in spending.

Clearly, post-election sterling is looking bullish. Political uncertainly and fiscal issues are off the radar. The new government has made clear intentions to take control of the deficit and the FX markets have rewards their decision to do so. On Tuesday, the pound traded within touching distance of 1.24 against the Euro. Since then we have seen some profit taking and the Euro looking slightly firmer against other major currencies.

Friday 02 July 2010, 04:20pm