Last week the Pound put in a strong performance against the majority of its most traded currency peers as encouraging economic data for the UK boosted the appeal of the British asset.
A report confirmed that the UK economy expanded by 0.8 per cent in the third quarter of the year while separate figures showed a surge in UK house prices.
Gains against the US Dollar were also enabled by the falling odds of the Federal Reserve opting to taper stimulus at its December meeting.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6366 as of 14:45 GMT
Today Sterling advanced on the majority of its counterparts during European trading as UK manufacturing PMI trumped estimates, adding to the brightening picture of the UK’s economic recovery and supporting the view that the Bank of England might be forced into adjusting fiscal policy earlier than anticipated.
As currency strategist Paul Robson noted; ‘The markets will continue to romance the idea that the Bank of England will ultimately have to raise interest rates earlier than is currently expected. The UK recovery does seem to be leading many other developed nations and that translates into a favourable move in interest-rate spreads and that is something that tends to support the currency.’
The Pound also surged against the Euro as the gauge of manufacturing came in at 58.4 rather than 56.1 and job creation in the sector jumped to a 2 ½ year high.
October’s reading was also upwardly revised to 56.5.
1 US Dollar is currently worth 0.6111 pence
In a statement accompanying the figures Markit economist Rob Dobson observed; ‘UK manufacturing continued to hit the high notes in November […] The sector is on course to beat the 0.9 per cent increase in output seen in the third quarter […] It also looks as if the strong recovery in the sector is translating into meaningful job creation […] The manufacturing expansion remains broad-based by sector [and] demand from the domestic market continues to surge higher’.
If today’s UK construction and services reports also beat expectations the Pound could climb higher still over the next five days.
Economists have forecast that the measure of construction dipped from 59.4 to 59.0, still above the 50 mark separating growth from contraction, while the measure of services eased from 62.5 to 62.0 in November.
Of course the Bank of England’s rate decision is likely to be the main cause of Pound volatility this week.
While the central bank is expected to hold rates at record lows it may make some reference to bringing forward the timeline for raising interest rates.
Key UK data for the week ahead:
Tuesday: Halifax House Price
BRC Sales Like-for-Like
Purchasing Manager Index Construction
Wednesday: Purchasing Manager Index Services
Thursday: Lloyds Employment Confidence
Bank of England Rate Decision
Friday: Chancellor of the Exchequer George Osborne Makes Autumn Statement in the House of Commons.
BoE/GfK Inflation Expectation
Current Pound Sterling (GBP) Exchange Rates:
< Down > Up
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6366 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.2086 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7940 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9993 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6111 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8274 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5577 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5002 >
(As of 14:45 GMT)
