Sterling Euro Exchange Rate Jumps To 20-Month High

Published: Monday, 23 April 2012 09:00 BST - Written by John Cameron

STORY LINK Sterling Euro Exchange Rate Jumps To 20-Month High

Sterling sparkled during last week’s session, out-performing nearly all of the other sixteen most-actively traded global currencies, following a string of encouraging data releases. With numbers released earlier in the week confirming that the level of domestic unemployment was on the wane and that last month had seen an unexpected uptick in inflation, Friday’s UK Retail Sales data for March, which thrashed expectations to print at 3.3%, made sure that the Pound ended the week with a bank. Analysts had been expecting an increase of only 1.3% in British shop in March. The unexpectedly strong showing was attributed to unseasonably hot weather in the UK last month, and to panic buying of petrol supplies by British drivers due to fears of a tanker driver strike.

The positive week of UK data saw the Pound climb to significant levels against several other major currencies, with GBP EUR breaking to a new 20-month high of 1.2252 on Thursday. Meanwhile, Sterling jumped to 1.6150 against the US Dollar on Friday – a level which has not previously been seen since October of last year.

As this week’s session gets underway, the Pound appears to be losing its lustre a little; last night saw both the GBP EUR and GBP USD exchange rates open at a lower level than their Friday close. A downward ‘price gap’ is most often considered a negative indicator by technical analysts, so the portents do not appear good for the chances of another strong week for the Pound. With Wednesday’s initial UK GDP Q1 growth numbers expected to show a slight expansion in British economic activity of 0.1% in the first three months of 2012, there appears to be pronounced danger of Sterling weakness. If the key figure shows at anything less than the expected level, then the UK economy will have registered two consecutive quarters of non-positive growth and Britain will officially have slipped back into recession.

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