British Pound (GBP) Exchange Rate Rallies by Most for a Month against the US Dollar
As markets were closed on Monday for the May Bank Holiday British Pound movement was restrained, but on Tuesday Sterling jumped against the US Dollar by the most for four weeks thanks to a surprisingly strong domestic report.
If you're looking to make an international money transfer, we recommend TorFX.
The currency broadly strengthened in response to an unexpectedly upbeat UK services report.
While economists had expected the UK Markit services gauge to come in at 57.8 from 57.6 in March, the measure actually jumped to 58.7 – pushing well above the 50 mark separating growth from contraction.
This follows last week’s impressive UK manufacturing report.
Sterling advances on 13 of its 16 most-traded currency counterparts
David Nobel, of the Chartered Institute of Purchasing and Supply, said of the result; ‘Growth and momentum in UK services remained steadily bullish in April, as activity increased at the fastest rate this year.
‘Most encouraging of all has been the increase in job creation since last October, a reflection of positive prospects of market expansion. With business confidence rising further in April, firms seem convinced that a long-term strong trend is set to continue.’
The report saw Sterling advance on 13 of its 16 most-traded currency counterparts and post a gain of 0.5 per cent against the US Dollar.
The composite PMI measure for the UK came in at 55.1 last month, up from a positively revised 54.2 the previous month.
Today’s result – particularly when viewed in conjunction with last week’s news – supports the argument for the UK’s economic momentum building in the second quarter of the year.
While tomorrow’s UK BRC shop price index and new car registrations report will be of interest, this week’s major Pound mover is likely to be the Bank of England’s policy meeting and rate decision – taking place on Thursday.
The central bank is expected to leave interest rates at record lows and the level of asset purchases unchanged.
However, since the BoE last gathered the UK has released impressive employment, growth, manufacturing and services data.
This might push the central bank into adopting a more hawkish attitude, and if that proves to be the case the GBP exchange rate could extend and consolidate gains.
Other reports to be particularly aware of in the days ahead include German factory orders, New Zealand/Australian employment figures, China’s trade data and UK trade balance and industrial/manufacturing production data.
Fed Chairwoman Janet Yellen’s economic testimony and the European Central Bank’s rate decision will also be of considerable interest.
The British Pound is currently trading against the Euro in the region of 1.2169 and trading against the US Dollar in the region of 1.6947.