While the Euro steadied against the US Dollar and consolidated its position against many of its other main rivals following the publication of surprisingly strong industrial production data for the Eurozone, it was the Pound which dominated for the first half of European trading.
News that the pace of UK inflation had hit the Bank of England’s 2 per cent target for the first time since 2009 pushed the Pound higher against its peers.
The British currency was boosted against almost all of its currency counterparts as investors digested the result.
However, as slowing inflation adds to the case for the Bank of England raising interest rates sooner than forecast, gains were trimmed shortly after.
In the opinion of Valentin Marinov of Citigroup Inc; ‘Sterling lost some ground on the CPI release. Abating price pressures would continue to support real purchasing power of UK consumers and prop up growth. The improving macroeconomic background should continue to support Sterling and it could be a buy on dips.’
GBP/EUR gains were also limited by the Eurozone’s surprisingly upbeat industrial output report.
Eurostat figures showed that industrial production in the currency bloc expanded more quickly than expected in November of 2013, rising 1.8 per cent month-on-month following a positively revised decline of 0.8 per cent in October.
Industrial production was up 3.0 per cent on the year, significantly better than the 1.8 per cent gain forecast.
The GBP/USD pairing could also slip further this afternoon if today’s US advance retail sales figures show a better-than-expected gain.
Retail sales in the world’s largest economy are forecast to climb by 0.1 per cent in December following November’s 0.7 per cent advance.
However, over the next two days the Pound may be supported against its major rivals prior to the release of UK’s own retail sales data.
Pound Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6404 ,
Pound Sterling,,Euro,1.1996 ,
Pound Sterling,,Australian Dollar,1.8207 ,
Pound Sterling,,New Zealand Dollar,1.9525 ,
US Dollar,,Pound Sterling,0.6096 ,
Euro,,Pound Sterling,0.8336 ,
Australian Dollar,,Pound Sterling,0.5494 ,
New Zealand Dollar,,Pound Sterling,0.5116 ,
[/table]
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