Thursday saw gains in both sterling and the euro.
However, while gains in the former seem clearly attributable to the better-than-expected data out in recent days in the single currency area it seems to be somewhat more a case of 'appreciation by default' in the case of the euro, as the European Central Bank (ECB) shies away from pulling the trigger on further aggressive easing measures.
For intra-day traders it must be taken into account that yesterday's moves in FX markets may also be due to positioning ahead of Friday's US non-farm payrolls report. Hence, until the important levels of technical resistance are breached any upside in either currency may be limited or quickly undone, according to analysts at Sharecast.
In that same vein, it must be said that many leading economists continue to publish forecasts calling for the single currency to weaken as the economic recovery strengthens in the US, which is probably what ECB President Mario Draghi has been waiting for.
Acting as a backdrop, market commentary continues to suggest that European authorities have been premature in claiming that debt sustainability in the Eurozone periphery has been achieved. Lower inflation, or deflation, makes it harder for countries to keep their stock of debt from growing, as do a lack of reforms and low potential rates of growth in those economies.
Euro/dollar moved towards 1.3869. It now faces its April 11th highs and in the very short-term may even rise to 1.3967 but it faces two levels of resistance at 1.4008 and 1.4016, technical analysts at Commerzbank pointed out to clients.
The German broker expects those levels to hold, adding that: "we look for these latter levels to hold the topside. We view the longer term pattern as a potential bearish wedge."
Pound rises on strong economic data
Sterling continued to grind higher, buoyed by stronger-than-expected data on UK house prices and the manufacturing sector, amongst other factors.
Cable, as the sterling/US dollar exchange rate
is known in markets, looks to be headed towards 1.6900/25 and possibly 1.7041, its August 2009 peak, those same technical analysts at Commerzbank pointed out.
Sterling finished the day up by 0.09% at 1.6890 versus the American currency.
Speaking to lawmakers on Thursday Bank of England (BoE) policy-maker Spencer Dale said there is little evidence of overheating in British house prices, but added that "we should be nervous about what's going on".
Somewhat warier was Sir John Cunliffe, Bank Deputy Governor. In a speech delivered in the evening he remarked that the danger signs in UK housing resembled "a movie that has been seen more than once in the UK".
Lastly, analysts at Citi were cited on Thursday as arguing in favour of earlier rate hikes in the UK.