Expat Exchange Rate Update – Pound (GBP) Hits 4-Week High, Euro (EUR) Recovers Losses
The Pound adopted a bullish relationship with the US Dollar yesterday as UK trade balance and factory order data came in above the levels expected, supporting signs that the UK’s economic recovery continues to gather momentum.
During the European session Pound/US Dollar movement was fairly limited due to a lack of pertinent economic news, although Sterling was able to brush a four-week high against its North American counterpart.
While Sterling slipped against the Euro in response to comments issued by a European Central Bank official (regarding the necessity of maintaining record low interest rates for at least several years) the British asset was able to retain gains against the US Dollar.
Bank of England policymaker Spencer Dale was quoted as saying that interest rates would be raised ‘when we’ve seen a sustained recovery and the economy is strong enough to stand it. The message we’ve been giving to businesses is that we don’t think that’s anytime soon.’
GBP/EUR losses were largely the result of the Euro being boosted by unexpectedly strong business confidence data for Germany.
As the European session opened German growth figures pointed at expansion of 0.3 per cent in the third quarter.
But although growth in the Eurozone’s largest economy slowed in the third quarter, confidence in the region is improving, as was evidenced by three German business sentiment reports.
The IFO business climate gauge advanced from 107.4 to 109.3 in November while the current assessment measure rallied from 111.3 to 112.2 and the IFO expectations index climbed from an upwardly revised 103.7 to 106.3.
Given the less-than-impressive reports to emerge from the Eurozone in recent weeks this result had a cheering effect and helped the Euro post widespread gains before the close of local trading.
With data from the Eurozone and Canada dominating the headlines today, US Dollar movement was a little stilted.
The Pound is currently trading against the US Dollar in the region of 1.6189
The Euro is currently trading against the Pound in the region of 0.8355