US dollar rallies as recovery gathers pace
The outlook for the US economy was boosted as consumer confidence rose to the highest level in more than five years. This was enhanced by the ongoing recovery in the US residential property market as home prices increased by the most in seven years. The S&P/Case-Shiller index of property prices rose by 10.9% in the twelve months from March 2012. The data boosted expectations the Federal Reserve could reduce the pace of its QE in the coming months. This prompted a US dollar rally which made gains against both sterling and the euro. GBP/USD slipped below the $1.51 level to a low of $1.5024 while EUR/USD softened to a low of $1.2847.
In contrast to yesterdays positive data from Germany; the gap between Europes biggest economy and the rest of the eurozone was further evidenced as French consumer confidence fell to the lowest level since July 2008. The survey also showed French households think the unemployment rate, currently at 11%, will continue to worsen this year. The recent mix of data from Europe leaves GBP/EUR hovering just below the 1.1700 mark.