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Pound continued to defy expectations yesterday as it broke through the 1.50 barrier against the dollar for the first time this year and also made a 7 week high against the euro.

The prominent piece of data that gave sterling a kick was the RICS price balance that showed that the deterioration in house prices is continuing to slow. Demand is especially up in overseas investors looking at UK commercial property. Although sterling data was supportive, releases from its trading partners were not quite so bullish for their respective currencies.

Euro was not helped by the confirmation that ‘non-standard measures’ such as quantative easing will be put into force in the EU in May. This, combined with the almost certainty of a rate cut in April, proves that the ECB lackadaisical approach to combating the recession has done them no favours. US data was also poor as it showed that headline inflation was negative for the first time since 1955, this of course came 24hrs after President Obama spoke of ‘glimmers of hope’. The levels are nowhere near the vampiric deflation that Japan suffered in the 1990s and are mainly due to the slump in oil prices over the past 12 months.

Euro sellers will be hoping that EU CPI due today at 10.00 will stop sterling in its tracks and technical levels suggest that further gains will be hard fought. Housing starts from the US are expected to be poor as developers shifted existing inventories in March.

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

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