Yesterday the British Chambers of Commerce released a pretty upbeat report detailing improved business confidence and the expectation that the UK’s economic recovery will continue at its current pace in the near future.
Although the US Dollar was also supported by positive domestic trade data, the Pound was able to edge close to a two-year high against its North American rival.
With investors betting that the Bank of England will opt to keep the level of asset purchases unaltered when it delivers its rate decision tomorrow, Sterling was within touching distance of a one-month high against the Euro.
The Pound was little changed following the release of a Halifax home price report.
While the report showed that home values unexpectedly declined in December, the mortgage provider asserted that house prices will continue to climb over 2014.
A Halifax economist was quoted as saying; ‘Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence. This will increase the likelihood that more people will consider buying a property in 2014, therefore supporting housing demand.’
However, later today the minutes from last month’s Federal Open Market Committee policy meeting will be published. If the minutes add to the case for the Federal Reserve tapering stimulus in the months ahead the ‘Greenback’ could be boosted and GBP/USD gains reversed.
US mortgage applications and employment change figures will also be of interest.
Meanwhile, the Pound held relatively steady against a fluctuating Euro as German trade data and Eurozone retail sales/employment reports offered a mixed picture of the currency bloc’s economic recovery.
The unemployment rate in the Eurozone held at 12.1 per cent as joblessness in nations like Italy climbed. As yesterday’s inflation report added to concerns that deflation could hinder the Eurozone’s recovery, investors are looking ahead to the European Central Bank’s rate decision.
Although the ECB isn’t expected to introduce any additional measures this week, the prospect of negative rates being introduced will keep pressure on the Euro.
Tomorrow the BoE rate decision will largely be responsible for driving Pound movement, although UK trade balance data is also likely to have an impact.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6416 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.2075 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.8401 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9854 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6092 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8281 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5434 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5039 <
(As of 11:00 GMT)
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