For a second day the Pound was able to advance on the Euro, strengthening against its common currency rival in spite of a lack of upbeat UK data.
Ahead of tomorrow’s UK retail sales report Sterling strengthened to an almost two-week high against the Euro thanks to comments made by Bank of England Policy Marker Martin Weale.
While the likelihood of the BoE increasing interest rates this year has declined slightly over the last few weeks in response to UK economic reports falling short of target levels, during an interview Weale intimated that borrowing costs can only be held at record lows for so long.
During an interview for the Reading Post Weale delivered a positive assessment of the UK’s economic performance, commenting; ‘My sense is things are going quite well. That looking at the evidence, the economy is growing in a way which is quite different from a year ago. Inflation is slightly below target and after a long period of above target inflation that is certainly good news if you are doing my job’.
Weale went on to say; ‘What we are starting to see is that wage growth is starting to pick up and that’s very encouraging because there has been a squeeze on wages and for growth to be sustained we do need income and wages to be rising.’
He added that the export market needs to pick up, but that the economy is looking in better shape and that interest rates will ‘return to more normal levels’ as the economy’s economic output achieves pre-crisis levels.
As investors digested Weale’s statements the Pound posted modest but fairly widespread gains, edging higher against the US Dollar and achieving a high of 83.39 against the Euro.
The Euro, meanwhile, was still feeling the pressure following yesterday’s comparatively dovish statement from European Central Bank President Mario Draghi.
The common currency was weaker against most of its rivals on Wednesday and the expectation that the ECB and BOE might be about to take opposing policy approaches could help Sterling consolidate its advance in the weeks ahead.
If tomorrow’s UK retail sales report shows the improvement expected the Pound may extend gains.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8337,
Euro,,US Dollar,1.3795,
Euro,,Canadian Dollar,1.5361,
Euro,,Australian Dollar,1.4942,
Euro,,New Zealand Dollar,1.6044 ,
US Dollar,,Euro ,0.7248,
Pound Sterling,,Euro,1.1996,
Canadian Dollar,,Euro,0.6510,
Australian Dollar,,Euro,0.6688,
New Zealand Dollar,,Euro,0.6237 ,
[/table]
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