By Jonathan Watson

Sterling has weakened off this morning following some negative purchasing data from the UK services industry with a dip reflecting the weak nature of the UK recovery . Similair figures from the European Union held steady, giving rise to a weakening in the GBPEUR pairing. Virtually all of the Sterling gains made in the last two weeks against the Euro have been eradicated following reports that European banks were in slightly stronger positions than anticipated. The Euro had weakened as a result of question marks over their ability to pay back loans to the European Central Bank.

The US dollar continues to trade this lunchtime at a 6 week high. Poor data on jobs seriously affected the currency last week and some analysts see the US heading for a double dip recession. 125,000 jobs were lost in the US last month on the Non – Farms Payroll data. Retail sales account for 2/3 of economic activity so movements here do affect the strength of their economy. This situation is presenting some good opportunities for those with US dollar requirements. So whilst we could see gains should a double dip look likely, the anticipation of continued negative data in the UK makes current levels very attractive.

Sterling has still made gains against a host of currencies recently. Agaisnt the South African Rand, the Canadian dollar and the Thai Bhat we are seeing gains which may be eradiacted if more negative news comes out against Sterling.

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