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Pound Sterling Soars Against 16 Most Actively Traded Currencies
Published: 19 Dec at 10 AM Tags: Pound Sterling, Euro Exchange Rate, Euro Crisis, UK, Inflation,
The pound soared yesterday against all 16 of the most actively traded currencies yesterday after much stronger than expected data underlined the economic recovery underway in the UK.
Firstly, The Office for National Statistics reported that UK unemployment declined by a much sharper level than had been expected in the 3 months to October with a fall of 99,000 from the jobless figures to 2.39 million people, the lowest level since 2009.
The unemployment rate also fell from 7.6% to 7.4% in the quarter through September, moving ever closer to the Bank of England’s target of 7%.
Howard Archer, IHS Global Insight’s Chief UK and European Economist commented that “Despite the sharp drop in unemployment, we believe the odds are still strongly in favour interest rates staying at 0.50% all through 2014. For what it is worth, our current view is that the Bank of England will start to raise interest rates gradually from the third quarter of 2015.”
Secondly, the Bank of England released the minutes of the last Monetary Policy Committee (MPC) meeting and these show that the MPC seems confident that the current economic expansion in the UK will continue. Indeed, Governor Mark Carney and his colleagues signalled that they were comfortable with the level of sterling but added that “any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery.”
Thirdly, UK retail sales have recovered strongly in the year to December according to the Confederation of British Industry’s (CBI) with retailers expecting robust growth in sales volumes to continue in the year to January.
Barry Williams, Asda Chief Merchandising Officer for Food and Chair of the CBI Distributive Trades Survey Panel commented that “Customers have clearly held off spending through the Autumn and we’re only now seeing them start to hit the stores. Retailers are now gearing up for the crucial pre-Christmas week and are optimistic for the New Year.”
In the euro zone, a survey showed that German economic expectations surged this month to record their strongest level in seven years.
Overnight in the US, the Federal Reserve announced that it will start to scale back its monthly bond-buying programme, commonly known as Quantitative Easing (QE) from $85 billion to $75 billion a month from January 2014 and stated that it would make similar moderate reductions in the future, subject to incoming economic data.
The Fed policymakers are also predicting that the jobless rate, currently at 7% will drop to around 6.5% by the end of 2014. However, in a strengthening of their ‘forward guidance’ policy, they also stressed that they would hold US interest rates close to zero "well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below the 2% longer-run goal".
Firstly, The Office for National Statistics reported that UK unemployment declined by a much sharper level than had been expected in the 3 months to October with a fall of 99,000 from the jobless figures to 2.39 million people, the lowest level since 2009.
The unemployment rate also fell from 7.6% to 7.4% in the quarter through September, moving ever closer to the Bank of England’s target of 7%.
Howard Archer, IHS Global Insight’s Chief UK and European Economist commented that “Despite the sharp drop in unemployment, we believe the odds are still strongly in favour interest rates staying at 0.50% all through 2014. For what it is worth, our current view is that the Bank of England will start to raise interest rates gradually from the third quarter of 2015.”
Secondly, the Bank of England released the minutes of the last Monetary Policy Committee (MPC) meeting and these show that the MPC seems confident that the current economic expansion in the UK will continue. Indeed, Governor Mark Carney and his colleagues signalled that they were comfortable with the level of sterling but added that “any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery.”
Thirdly, UK retail sales have recovered strongly in the year to December according to the Confederation of British Industry’s (CBI) with retailers expecting robust growth in sales volumes to continue in the year to January.
Barry Williams, Asda Chief Merchandising Officer for Food and Chair of the CBI Distributive Trades Survey Panel commented that “Customers have clearly held off spending through the Autumn and we’re only now seeing them start to hit the stores. Retailers are now gearing up for the crucial pre-Christmas week and are optimistic for the New Year.”
In the euro zone, a survey showed that German economic expectations surged this month to record their strongest level in seven years.
Overnight in the US, the Federal Reserve announced that it will start to scale back its monthly bond-buying programme, commonly known as Quantitative Easing (QE) from $85 billion to $75 billion a month from January 2014 and stated that it would make similar moderate reductions in the future, subject to incoming economic data.
The Fed policymakers are also predicting that the jobless rate, currently at 7% will drop to around 6.5% by the end of 2014. However, in a strengthening of their ‘forward guidance’ policy, they also stressed that they would hold US interest rates close to zero "well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below the 2% longer-run goal".
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Source: moneytransfer.co.uk