Sterling rises on good manufacturing data and house price increase

Sterling rose versus the dollar on Wednesday after data showed the rate of decline in British manufacturing eased more than expected last month, in a possible sign that record low interest rates might be having some impact. The manufacturing purchasing managers' index improved to 39.1 in March from 34.9 in February. Analysts had expected a more modest improvement to 35.0. “The pound is very sensitive to the fortunes of the domestic housing market,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “The pound is increasing on the back of this upside surprise in house prices.” U.S. President Barack Obama said on Wednesday there was "enormous consensus" between the world's largest developed and emerging economies on plans to haul the world out of the deepest downturn since the 1930s. The GBP/USD is currently trading at $1.4530 as of 8:50am, GMT.

The yen fell against the euro and the dollar as Asian stocks gained on optimism the worst of the global economic slump may be ending, spurring investors to increase purchases of higher-yielding assets. “Asian and Japanese stocks are rising, reflecting an improvement in risk appetite,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “This is leading to selling of the yen.” “Asian and Japanese stocks are rising, reflecting an improvement in risk appetite,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “This is leading to selling of the yen.” The USD/JPY is currently trading at 99.30 as of 9:05am, GMT.

The Australian and New Zealand dollars advanced after Australia’s trade surplus widened and commodity prices, adding to optimism the worst of the world recession may be ending. Australia’s dollar gained as an Australian newspaper reported Prime Minister Kevin Rudd plans a third round of stimulus in next month’s budget. The currencies also rose as equities rallied and New Zealand’s commodity export price index gained in March for the first time in eight months. “The near-term outlook for New Zealand is undeniably ugly and further rate cuts from the Reserve Bank of New Zealand are likely in coming months, which will weigh on the currency,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. New Zealand’s dollar will trade between 55.50 U.S. cents and 57 cents, she said.

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