UK’s sterling that trended lower against most majors in early Asian trading started reversing its course at the beginning of the European session as European shares opened higher today. However, it pared its Asian session gains against the Swiss franc and the euro. Market players are waiting for the first quarter GDP report from the U.K., which is due out shortly.
In early trading, the U.K. FTSE 100 index advanced 0.3% to 5,684.34, the German DAX index rose 0.4% to 6,194.75 and the French CAC-40 index edged up 0.1% to 3,928.55.
At 4:30 am, the U.K.’s Office for National Statistics is set to release GDP data for the March quarter. The first estimate of Q1 GDP is expected to show that the UK avoided a double-dip recession, and show how far the British economy grew in the first quarter of 2010, with estimates of 0.4% on a quarter-over-quarter basis, while analysts see a contraction of 0.1% on a yearly basis.
The pound that slipped to a low of 143.14 against the yen around 2:35 am ET reversed its direction thereafter and edged higher to 143.77 after an hour. In near-term, the pound-yen pair may target resistance at 144.10 level. The pair that closed yesterday’s deals at 143.78 is presently quoted at 143.42.
Japan’s all industry activity dropped 2.3% in February on a monthly comparison, following a revised 3.4% rise in January, the Ministry of Trade, Economy and Industry said today. Economists had expected only 1.5% decline for February. On an annual basis, all industry activity grew 4.1% in February, much faster than the 1.9% growth seen in the previous month.
The pound declined after hitting a new multi-week high against the Swiss franc in early trading. The pound slipped to 1.6589 against the Swiss franc by 2:35 am ET from 1.6650 hit earlier in the Asian session. The pound-franc pair is presently quoted at 1.66, compared to 1.6585 hit late New York Thursday.
The pound that rose to a new multi-month high of 0.8609 against the euro by 1:10 am ET pulled back and hit as low as 0.8641 around 3:50 am ET. The euro-pound pair that was worth 0.8647 at Thursday’s close is currently quoted at 0.8634.
The euro has been under strong selling pressure after Moody’s Investors Service cut Greece’s sovereign debt to A3 on Thursday and said it was likely to reduce the rating further unless the deficit-burdened government was able to restore market confidence.
Moody’s also put Greece’s Prime-1 short-term issuer rating under review for downgrade. Greece’s country ceilings for bonds and bank deposits continue to be rated Aaa, in line with the Eurozone’s rating, and remain unaffected by the latest rating action or the review.
Officials from the IMF and the European Commission are currently in discussions with Greek authorities on providing financial support to the debt-stricken country.
Eurozone officials have offered an emergency package of loans worth up to EUR 30 billion to the Greek government, with a further EUR 10-15 billion coming from the IMF.
The pound that fell to a 3-day low of 1.5318 against the US dollar by 2:35 am ET bounced back and hit as high as 1.5389 around 3:30 am ET. The cable is currently quoted at 1.5373, compared to 1.5380 hit late New York Thursday.
Looking ahead, Eurostat is scheduled to release industrial new orders data for February. New orders are forecast to rise by 1% on a monthly basis and by 11.2% on a yearly basis.
The U.S. Durable goods orders and new home sales-both for the month of March have been slated for release in the New York session.