Sterling surged against the majority of its currency counterparts during European trading yesterday as the Bank of England published its inflation report.
The report contained positively revised growth projections for the UK and stated that interest rates would be held at record lows even after the unemployment rate fell below 7 per cent.
Overnight the Pound trimmed gains against the Euro and eased away from a two-week high against the US Dollar as the RICS house price measure fell from 56 per cent in December to 53 per cent in December rather than advancing to 58 per cent as forecast.
Despite this result the Royal Institute of Chartered Surveyors believes that a shortage of homes will see house prices continue to climb.
However, Sterling losses were limited and the Pound extended gains against peers like the US, Australian and New Zealand Dollars as a BoE official inferred that expectations for a rate increase in 2015 are reasonable.
Spencer Dale, the Bank of England’s Chief economist, asserted that the market is currently predicting that interest rates will remain ‘on hold until about the Spring of next year and then rising to around 2 per cent by the end of 2016 and on that forecast, on that basis, we have a forecast in which the economy looks pretty good. Based on what we know now, the profile for interest rates looks reasonable’.
The Pound was little changed against the Euro as Greek unemployment hit a fresh record high.
With the weekend fast approaching, US advance retail sales figures are the major economic news to be aware of.
A surprising result could have far reaching consequences.
Of course, further Sterling movement could also be triggered by tomorrow’s UK construction output report.
Output is expected to have risen by a seasonally adjusted 2.0 per cent in December, month-on-month, following a decline of 4.0 per cent in November.
Economists have forecast that construction output will be up 6.3 per cent in the year.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6640 ,
Pound Sterling,,Euro,1.2169,
Pound Sterling,,Australian Dollar,1.8577,
Pound Sterling,,New Zealand Dollar,1.9989 ,
US Dollar,,Pound Sterling,0.6009,
Euro,,Pound Sterling,0.8218,
Australian Dollar,,Pound Sterling,0.5380,
New Zealand Dollar,,Pound Sterling,0.5004,
[/table]
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