Tuesday, February 18, 2014

Pound To Euro & Pound To Dollar Exchange Rates Rallying As Investors Buy Sterling

The Pound to Dollar exchange rate (GBP/USD) has rallied to a three year high this week as investors bought the Pound after UK interest rate expectations factor in an interest rate hike early next year and a 2% base rate by the end of 2016. This puts the UK ahead of the curve versus most other western nations. 

The BoE raised its forecast for UK growth this year to 3.4 percent from 2.8 percent earlier this week. 

The Pound has rallied almost 2 percent against the Dollar since the start of the week, its best weekly performance since June 2013, the Dollar is weak, the Pound is strong but can this continue over the next few months? 

This recent move is underpinned by some strong fundamentals, the UK recovery is strong, and the U.S. recovery is looking shaky. Weak U.S. jobs data and a dovish outlook from new Federal Reserve chair Janet Yellen has combined with softer-than-expected retail sales and industrial output in January and a weaker than expected Philadelphia Fed survey which implied the American economic outlook was far from rosy, the Dollar picture looks bleak, further weakness could ensue. 

The Pound is also rallying against the Euro (GBP/EUR), growth figures and interest rate expectations are high in the UK and low across Europe, this has pushed the Pound to Euro exchange rate close to a 3 year high, it’s certainly a good time to exchange Pounds into Euros. 

The Pound Sterling is now trading at its highest exchange rate for over five years against a basket of currencies; further gains could be on the cards next week. 

Market focus will now shift to scheduled data releases next week, the week stats slow, Tuesday brings the release of UK Consumer Price data followed by the German ZEW index; the Pound to Euro rate is likely to be the most volatile currency pair after these announcements.
via:http://www.exchangerates.org.uk/news/8643/pound-to-euro-pound-to-dollar-exchange-rates-rallying-as-investors-buy-sterling.html

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