Tuesday May 3, 2005 - 08:00:35 GMT
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CMC Markets - www.cmcmarkets.com
Euro backs away from lows against Sterling, UK economic data awaited.
May 3rd - Having traded down as low at 0.6750, the Euro is now starting to stage something of a recovery against the Pound. Although the common currency has been subjected to a run of weak economic data - most recently including yesterday’s downbeat PMI numbers – there’s a degree of concern building ahead of this week’s UK general election. Although there’s little to distinguish between the economic policies of either of the two main parties, the possibility of a hung parliament does exist and the uncertainty such scenarios produce as a result could prove somewhat distracting for the market. The ECB rate verdict is due this week although consensus here is yet again that there will be no change, whilst the MPC’s meeting has also been delayed a week because of the election. Obviously any quick tightening of monetary policy by the Bank of England would likely be sufficient to drive Sterling higher, although such a move still looks unlikely in the short term given the mixed nature of UK economic data right now. However, today’s PMI number and next Monday’s PPI reports will be scrutinised for signs of inflationary pressures and any consistent indicators here could easily push the Pound back into favour.
Nas Nijjar and Enis Mehmet
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