Pound Sterling Exchange Rate Spikes to 3-Month High ? Further Gains Forecast

November 4, 2015 - Written by David Woodsmith

STORY LINK Pound Sterling Exchange Rate Spikes to 3-Month High ? Further Gains Forecast

GBP/EUR Conversion rate Predicted to Hold Above 1.41 after Positive UK Services Growth

The Pound Sterling (currency : GBP) has put in a show-stealing session in the global currency markets, outperforming all of the other sixteen most actively traded global currencies on the day.

The shift into Sterling assets from institutional investors was triggered by the publication of a go-ahead set of UK services sector data, with this month’s Purchasing Managers Index survey of Britain’s all important tertiary industries pointing to accelerated levels of expansion compared to last month.

The print of 54.9, versus analysts’ expectations of a result of 54.5, represented a pronounced uptick from September’s showing of 53.3 and the Pound posted strong gains across the board as a consequence.

UK Fourth-Quarter GDP to Rise on Better-than-Expected Composite PMI

Meanwhile, the Markit / CIPS UK Composite Purchasing Managers Index, which measures the overall level of activity in the domestic economy, doesn’t normally garner significant coverage amongst investors.

However, the showing 55.4 was well above the anticipated 53.6 outcome, suggesting that the Q4 Gross Domestic Product figures, penned in for publication early in 2016, will point to a strong bounce in UK growth.

The medium term future therefore looks bright for the Pound.

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The forward move for Sterling against the other major global tenders on the day suggested that investors believe that tomorrow’s Bank of England (BoE) policy statement will send out a positive message on interest rates.

The BoE’s policy committee have previously insisted that the UK’s current bout of deflation is transitory and that when inflation approaches the government’s self-imposed target of 2.0% a rate hike will come.

A repeat of this tomorrow is anticipated to send Sterling convincingly higher.

US Strength caused GBP/EUR Conversion Rate to Rally Today

The Pound Sterling euro exchange rate spiked to its highest level since August at 1.4177 GBP EUR during afternoon trading.

The sharp move higher was partially driven by the Sterling-positive factors above, but was added to by arbitrage funding triggered by the world’s leading currency pair – a stronger than anticipated set of private sector jobs figures in the US sent the EUR USD exchange rate lower and the attendant weakening of the shared currency helped fuel gains for GBP EUR.

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts Pound Sterling Forecasts