The pound rallied against the euro and the USD due to the UK labour market improving yesterday, with a reduction in unemployment from 5% to 4.9%. The month of March reduced the number of people out of work to 3.6K from 4.5K. Bank of England Minutes were also sterling positive as 9-0 voted to hold interest at 0.5% and 9-1 voted for no change to QE due to a rise in inflation seen yesterday.
Yesterday’s Spanish 2 year auctions were deemed extremely expensive as the short term cost of borrowing almost doubled rallying to 2.46% in one month. Even though Spain managed to sell €3Bn investors are still skeptical as to whether the nation will require a bailout
The euro remained under pressure prior to Thursday’s critical auction of 10-year government bonds, amid uncertainty as to whether the government will be able to reduce one of the Eurozone’s largest budget deficits in the face of a looming recession. The current yield is 5.89% and it will be interesting to see if supply will outweigh demand, pushing the cost up further.
Concerns over Portugal’s economic health intensified after Prime Minister Pedro Passos Coelho stated yesterday there were "no guarantees" that the country would meet its commitment to return to the international capital markets before September 2013.
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