GBP USD Rate Spirals, GBP EUR Tests Higher

June 12, 2013 - Written by Ben Hughes

STORY LINK GBP USD Rate Spirals, GBP EUR Tests Higher

The Pound Sterling was one of the best-performing of the sixteen most-actively traded global currencies during yesterday’s session, largely thanks to an encouraging NIESR GDP growth estimate for the UK economy, published just before the European equities close. The closely-watched prediction of the level of economic activity in the British economy used the UK Treasury’s official economic modelling software to predict that the British economic had expanded by a comparatively healthy 0.6% during the three months to the end of May. Even more positively, the NIESR’s report also saw the previous month’s estimate upwardly revised from 0.8% to 1.0%, suggesting that Britain’s economy avoided a triple dip recession by a larger margin than had previously been anticipated.

The news helped Sterling to recover its ground against the euro following a shaky start to the day which saw the Pound to Euro exchange rate (currency : GBP EUR) briefly trade back down below the 1.1700 level. By the middle part of the North American trading day, the pair had recovered and had broken back above 1.1760. Investors holding Sterling-denominated assets will be eagerly anticipating the latest round of British labour market data, due for release within the next hour, for further clues regarding the state of the UK economy. A positive showing from the jobs figures for the three months leading up to April will provide GBP EUR with renewed momentum moving forward.

Elsewhere, the Sterling to US Dollar exchange rate (currency : GBP USD) enjoyed a similarly Jekyll and Hyde session yesterday; having started the day on the back foot, the pair pushed forward strongly towards the latter stages of the North American American session to break up to above the 1.5650 barrier. Volatility for the Greenback on the day was driven by ongoing ‘will they / won’t they’ speculation regarding the future direction of the Federal Reserve’s monetary policy. Fed policy maker James Bullard weighed in with his thoughts on Monday night, stating that in his opinion, domestic inflation below the US government’s self-imposed 2.0% target meant that the US central bank should extend its controversial $85bn per month QE scheme. We will learn more when the Fed makes its latest policy announcement next Wednesday.

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TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts