British Pound (GBP) Exchange Rate Riding High against Euro, US Dollar
On Monday the British Pound (GBP) was trading higher against peers like the Euro (EUR), US Dollar (USD), Australian Dollar (AUD) and New Zealand Dollar (NZD).
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Last week Sterling surged against the majority of its currency counterparts as service sector data for the UK came in far above forecast levels.
The expectation that the impressive services result could lead to stronger second quarter growth helped Sterling achieve a nine-week high against the Euro and a four-and-a-half week high against the US Dollar.
The Pound’s upward momentum stuttered on Thursday after the Bank of England acted in accordance with economists’ expectations and left interest rates unchanged and the level of asset purchases at 375 billion Pounds.
However, before the week drew to a close a slightly stronger than anticipated increase in UK manufacturing production helped the Pound edge higher.
Gains in the GBP/EUR pairing also occurred as the Euro came under pressure as a result of hints that the European Central Bank intends to introduce additional stimulus in June.
While Pound movement was pretty stilted on Monday the British currency was modestly supported by the news that the Lloyd’s employment confidence index crept up from -2 to 1 last month.
The British Retail Consortium’s like-for-like sales data could have a slight impact on the Pound tomorrow, but investors will mainly be focusing on this week’s big UK news – British employment data.
On Wednesday the jobs figures are expected to show an employment change of 248,000 in the three months to March, with the UK unemployment rate easing down from 6.9 per cent to 6.8 per cent in the period.
The number of people filing for unemployment benefit is forecast to have dropped by 30,000 in April.
Although the Bank of England is no longer linking interest rate increases to domestic employment, a strong result would support the argument for the central bank hiking borrowing costs from record lows before the second quarter of 2015.
Broad-based Sterling gains could then occur.
This morning data compiled by the Chartered Institute of Personnel and Development revealed that the quarterly net employment balance climbed from +16 to +26, the strongest level since 2007.
According to one CIPD representative; ‘The UK jobs market looks set to continue its remarkable post-recession performance.’
The Bank of England’s inflation report will also be of particular interest to the Pound Sterling exchange rate this week.
Other probable causes of currency market movement in the week ahead include Chinese and US retail sales figures, Eurozone consumer confidence/final inflation reports and the US consumer price index.
The British Pound is currently trading against the Euro in the region of 1.2274 and trading against the US Dollar in the region of 1.6894.