May Market Update (week 3)

Currency trading of Sterling fell to a one-month low against the US dollar this week as the Bank of England Governor Mark Carney dampened expectations for tightening monetary policy in the near-term. Expectations for the Bank of England to raise interest rates from record lows in the first half of next year is what’s been driving sterling strength, hitting 2009 highs against the US dollar. But the rise has slowed down in recent weeks due to many analysts saying speculation about a rate rise this year looks overdone.

Elsewhere in the foreign exchange market, the euro also sank to a one-month low against the US dollar as of Wednesday, with selling pressure building.

The monthly ZEW survey of German economic sentiment fell short of analyst’s expectations coming in at 33.1 verses an expected 41.3. Selling in the euro accelerated on Tuesday after the Bundesbank, Germany’s central bank, said it was willing to back an array of stimulus measures from the European Central Bank next month.