Sterling continues its rise and Real falls on US survey

08-10-2009 13:12

The Pound Sterling continues its rally versus the US Dollar and Euro on the back of increasing services industry and due to the UK manufacturing rising more than expected in July, on which the Sterling reached a nine-month record high. The Brazilian Real dropped for the first time in more than a week as an US report showed that service industries decreased faster in the previous month, while fears concerning the worldwide economy have a negative impact on emerging currencies. Mexico’s Peso reached the highest level in two months as a result of Moody's Corporation stating that the nation’s prospects for investments are solid, eliminating speculations that Mexico would experience a downgrade for the first time since 1995.

Sterling’s rise

The British Pound could reach levels that are comparable with those from before the crisis due to this week’s optimistic reports for the UK economy following several months of contraction and a political slump. This Wednesday, the Pound Sterling reached a nine-month record high against the US Dollar, while it also is trading at an one-month record high against the Single Currency, boosted by this week’s UK reports that suggested a rise in UK services industry and manufacturing data. For that reason the Sterling is rising against the Single Currency and versus many of the 16 most popular currencies, while it only falls versus high-return assets such as Brazil’s Real.

Faster pace

Currency specialists confirm that the UK economy is recovering at a faster pace than other European economies, which stimulates the Pound Sterling and makes the stock markets in London more interesting for investors. A rebound pattern will be the result of continuing optimistic trends in the UK, on which the Sterling probably will rise mostly against the US Dollar and Japanese Yen, both considered as safe-haven currencies and not interesting for the present economic situation.

Real down

Brazil’s Real declined for the first time in a week, after posting the best results of the 16 most popular currencies in the Forex market. Additional job cuts and contracting services industry in the US resulted in uncertainty regarding the recovery of the worldwide economy, on which Real’s solid rally ended after one week of gaining against the US Dollar.

Mexican Peso

In the previous weeks, emerging currencies such as Mexico’s Peso, rose against the Greenback. Today, Moody’s Investors Service confirmed that Mexico’s present investment profile is stable, erasing concerns that Mexico may be downgraded and resulting directly in a bullish day for the Mexican Peso.