UK Pound Gains on Economic Forecast

UK pound is gaining against the US dollar and the Japanese yen today as an economic forecast expects growth to pick up in 2012. The Confederation of British Industry believes that Great Britain will avoid a technical recession this year, and that things will pick up. As a result, UK pound is heading higher against low beta currencies.

Also helping the pound in Forex trading is the general risk appetite today. Equities in Europe and the United States are higher, and that is providing some support to the pound. The news that Greek parliament has agreed to accept tougher austerity measures from the Eurogroup is providing risk appetite to the market in general.

UK pound is still struggling against the euro, though. Euro is a bit higher against the pound on the good news about Greece. However, there are still concerns about the euro — and the future of the eurozone. Greece still have plenty of hurdles to jump, and there is still debt to be dealt with in other southern European countries like Italy and Portugal.

As a result, the euro has been unable to rally solidly against the UK pound. If the euro continues to struggle, and Britain’s outlook improves, it is likely that sterling could gain the upper hand.

US Dollar Falls on Greek Vote

US dollar is lower as the Greek parliament votes to accept austerity measures requested by Eurogroup leaders as a condition for receiving bailout funds. US dollar weakness is a product of renewed optimism in Forex traders, and expectations for a stronger euro.

Risk appetite is back on as Forex traders find new optimism regarding Greece. Lucas Papademo won parliamentary support for the tougher austerity measures the Eurogroup leaders wanted, and that is providing support for the euro. The US dollar is falling back as a result.

With Forex traders interested in higher yields, it is little surprise that the greenback is pulling back. Recently, Ben Bernanke expressed his thoughts that interest rates would remain low until 2014, and the low yields are not attractive to those looking for higher returns.

Even though the US dollar is falling against the euro, though, it doesn’t mean that Greece is completely out of the woods. The austerity measures are unpopular, and Greek citizens continue to protest and display unrest. With all of the unrest in Greece, things could still remain troublesome. Plus, the euro is still at risk from other countries, like Italy, with high levels of debt.

Euro Rebound After Italy Sells Debt

The euro rebounded today after Italy sold maximum amount of its bonds on today’s auction, easing worries about the credit crisis in the European Union that reemerged after Moody’s cut credit ratings of several European countries.

Italy sold €4 billion of securities that mature in 2014, reaching its target. Yield dropped from 4.83 percent on the previous auction to 3.41 percent. The euro was supported by the positive outcome of the auction, while earlier the currency declined as Moody’s Investor Service downgraded ratings of several European countries, including Italy.