Pound Reaches 6-Month High vs. USD
Posted on 20. May, 2009 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
The EUR rose on Tuesday, trading at $1.3625, up half a percent from Monday, due to a surprisingly big improvement in German economic sentiment. The ZEW indicator jumped to 31.1 in May from 13.0 in April, above economist estimates of a 20.0 reading. This suggests that analysts and investors were not as grim about the economy as before.
The British Pound also rose to the highest level this year against the Dollar after ICAP, the world’s biggest broker of transactions between banks, posted increased profit, and Marks & Spencer Group Plc’s net income beat analyst estimates, stoking optimism that the worst of the recession is over.
Analysts said the EUR-positive reaction to the ZEW report suggested that market participants saw improving sentiment in the Euro- Zone as boosting demand for risk, even as other data show that the economy remains weak. Gains in the EUR and Sterling helped to push the Dollar down as some traders unwind positions in the U.S currency. The USD is perceived to be a safe-haven option during times of uncertainty; however, the ongoing bets that the global economy is improving has warmed demand among investors for riskier trades in past weeks.
