Sterling trumps counterparts after run of good data

Pound makes gains as wage growth continues

Data released yesterday helped to dismiss underlying concerns that the UK economy was slowing down and suffering a knock-on effect from the situation in the eurozone. The day kicked off with average earnings, claimant count change and unemployment rate releases all improving on forecasts. Wage growth in the UK has now outperformed inflation for a third consecutive month and by the widest margin recorded since 2008.

The release of the minutes from the Bank of England’s MPC interest rate meeting held no surprises for the markets, with all nine members voting to maintain the UK’s current base rate and to leave the asset purchase facility programme unchanged. Sterling opened at €1.3469 and climbed to a high of €1.3590 throughout the course of the day.

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The strong data from the UK also helped the pound strengthen against the dollar, as the US released a string of poor data. Building permits and producer price index readings came in under expectations, with core PPI and industrial production figures also unable to meet forecasts. This helped to push the pound up to highs of $1.540 against the dollar.

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Greek loan extension

It was also confirmed yesterday that Greece will ask for a six month extension on its European loan. Greek Finance Minister Yanis Varoufakis argued, “we should extend the credit programme by a few months to have enough stability so that we can negotiate a new agreement.”

However, Greece have made it clear that the loan extension should be distinguished from its full bailout programme which they are currently unwilling to accept. These are positive signs that Greece are willing to negotiate with Europe and over the course of the last couple of weeks, when we have seen positive reports emerge from negotiations, it has strengthened the euro against the pound and dollar.

Today’s data releases

There is a lack of data from the UK today which could potentially help underpin the gains sterling has made. In the eurozone we have the release of the ECB monetary policy meeting minutes. This is a detailed record of the ECB’s most recent meeting providing insight into what influenced their decision making on setting rates.  Over in the US we have unemployment claims and the Philly Fed manufacturing index, both of which could strengthen the dollar if they meet or improve on forecasts.

Stay in touch

The movements of the pound against its major counterparts seen yesterday highlight the necessity to stay in touch with your account manager here at the Foremost Currency Group. We can alert you to movements in the rates and ensure you make the most of your currency.

Contact me on the details below to discuss your requirements in more detail, or alternatively open an account today.

 

Kingsley Walker

+44 (0)1442 892060

[email protected]