Yesterday’s better-than-expected UK employment figures were the latest in a stream of data adding a rosy tint to the nation’s economic outlook. Consequently, the Pound was able to extend gains overnight and began the European session within touching distance of a 7-month high against the US Dollar.
The Pound Sterling to Euro Exchange Rate was in the region of 1.1904 as of 12:10 GMT.
While Sterling initially fluctuated against the Euro as Bank of England Governor Mark Carney delivered his testimony to parliament, the British asset recovered lost ground and posted a modest gain against its European rival as Carney confirmed that stimulus is having the desired effect.
In stark contrast to the overt caution displayed by European Central Bank President Mario Draghi last week, Carney stated: ‘The economy is picking up and the stimulus is working […] and while it’s early days, we expect as well that we are consistent with the path to returning inflation to 2 per cent.’
In reference to the BoE’s decision to offer unprecedented forward guidance regarding interest rate increases Carney commented; ‘My experience in talking to businesses, our experience in terms of surveys of household expectations have been that the message has been understood.’
Before Carney spoke one industry expert was quoted as saying; ‘It will probably be more of the same in terms of repeating the message of rate hikes being off the table. What might be different this time is the market reaction. After yesterday’s jobs data resulted in a rally in gilts, it could be a signal that market positioning more than adequately reflects expectations for the recovery and the risk of an early rate rise.’
1 Euro is currently worth 0.8400 pence
While Carney acknowledged that some investors believe that UK unemployment will drop to 7 per cent (the threshold marked out as the precursor to interest rate increases) faster than the BoE has forecast, he also argued that other analysts have pushed back their expectations.
Sterling gains against the Euro were aided by a disappointing industrial production report for the Eurozone. With production plummeting by 1.5 per cent rather than declining the 0.3 per cent expected the Euro broadly softened.
Tomorrow’s UK construction output data could be responsible for further Pound movement before the weekend, but Sterling seems set for another 5-day gain against rivals like the Euro and US Dollar.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5821 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1904 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7115 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9449 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6321 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8400 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5893 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5113 <
(As of 12:10 GMT)
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