The Pound is forecast to advance against the US Dollar and other major peers as bets made by future traders for the currency’s rise climbed to a three-year high.
Sterling is expected to rise as an accelerating housing boom in the UK is likely to spur the Bank of England into raising interest rates sooner than expected.
The currency advanced against the Euro for the first time in four days after data released over the weekend showed that UK house prices climbed to a record high this month. According to the data released by Rightmove, house prices in the UK climbed by 2.6% month-on-month in April and soared by 7.3% on a yearly basis.
Sterling is also expected to rise due to expectations that the UK’s unemployment level is expected to fall in the three months through February. The International Monetary Fund also offered support for the currency by raising its growth forecasts for the UK last week.
Adding support to Sterling today was the release of a report by economic forecaster EY which said that wages were set to rise more than inflation for the first time in almost six years, increasing expectations that consumer spending will increase.
Consumer spending is the biggest driver of the UK economy.
EY also said that it expects the UK economy to grow by 2.9% this year.
“There’s a good chance through the summer months the market will consider a Bank of England rate move sooner rather than later. That should offer the Pound more specific support. We’re entering a phase of real-income growth and that, coupled with the housing market, are the main catalysts for household consumption,” said the head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd in an interview with Bloomberg.
Tomorrow sees the release of the latest inflation data for the UK and Wednesday will see the publication of the latest unemployment data. A strong showing from either will support the Pound.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6714 ,
Pound Sterling,,Euro,1.2089 ,
Pound Sterling,,Australian Dollar,1.7772 ,
Pound Sterling,,Canadian Dollar,1.8355 ,
[/table]
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