Good morning! Sterling has fallen across the board in the last 24 hours including to 1.1597 against the euro. However these fluctuations are typical in the festive period (there isn’t much liquidity on the markets because most investors are off enjoying themselves) meaning the sterling movement shouldn’t be taken too seriously.
In fact not much has happened on the markets in the last 24 hours (it is New Year’s Eve!) but there has been some strong US and UK data.
The US home sales index increased 3.5% in November to 92.2 beating expectations of a 2.0% increase. This sits below pre-recession figures but bodes well for the US economic recovery.
In addition US unemployment fell 34,000 to 388,000 citizens in November. This is the lowest number since July 2008 and once more indicates the US economy is on course for 2011.
In the UK meanwhile house prices rose for the first time since May 2010 in November gaining 0.4%. Estate agents though consider this aberrant given the financial climate: tax increases expected in 2011 means demand on the housing market should remain low.
Furthermore several retailers are reporting that Christmas sales figures this December have exceeded all records. John Lewis for instance beat its previous festive sales record by 30% while Asda had four million customers on 23rd December. This bodes well for UK consumer demand and might be good for sterling in 2011.
by Peter Lavelle with foreign currency exchange specialist Pure FX.