After beginning the local session close to a three-week high against the US Dollar the Pound was able to consolidate gains as the Organisation for Economic Cooperation and Development upwardly revised its growth forecast for the UK.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6090 as of 11:35 GMT
In recent months UK services, employment, manufacturing and inflation data has trumped expectations, making it increasingly likely that the Bank of England will begin raising interest rates next year.
Now the OECD has almost doubled its growth expectations for the British economy.
Back in June the institution foresaw growth of 0.8 per cent for 2013 and 1.5 per cent in 2014. Now expansion of 1.4 per cent is expected for this year and 2.4 per cent for next.
The upgrade was the most significant for any major global economy and reflects the revised growth expectations published by the International Monetary Fund in October.
However, the OECD did warn of the economic danger posed by a hot housing market and its decision prompted this response from one industry expert; ‘The OECD have revised their forecast for UK GDP up by more than any other G7 country over the next two years. This provided more evidence that the UK’s hard work is paying off and the country is on the path to prosperity. [But] today’s report also highlights the risks that remain to the recovery and urges the UK to stick to the government’s plan that is growing the economy, lowering the deficit and inflation, and creating jobs. This is the only sustainable way to raise living standards for hardworking families.’
1 US Dollar is currently worth 0.6215 pence
As the Euro has been boosted by a stronger-than-anticipated economic sentiment survey for Germany (the Eurozone’s largest economy) the GBP/EUR pairing struggled during European trading.
Sterling was able to extend gains against the ‘Greenback’ however as the North American asset softened under the weight of expectations surrounding Federal Reserve tapering.
Although the publication of minutes from the Federal Open Market Committee meeting may shed more light on the central bank’s stance on easing, given recent comments issued by Chairman candidate Janet Yellen and several less-than-impressive economic reports for the US it seems increasingly unlikely that the Fed will taper before next spring.
Yesterday New York President William C. Dudley said this of the US economy; ‘While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015. As growth picks up, I expect to see more substantial improvement in labour market conditions.’
Despite this fairly encouraging outlook Dudley refrained from mentioning whether the current level of bond-buying should be scaled back, and the US Dollar softened as a result.
That being said, the OECD’s decision to lower the global growth outlook pushed investors towards safe-haven assets.
With minutes from the latest Bank of England policy meeting due to be released tomorrow, further Pound volatility can be expected before the week comes to a close.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6090 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1918 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7097 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9297 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6215 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8391 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5849 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5187 >
(As of 11:35 GMT)
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