Pound Extends Gains against Euro for the Seventh Day on Positive Economic Prospects

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Pound Extends Gains against Euro for the Seventh Day on Positive Economic ProspectsThe pound extended its gains against the euro for the seventh day, marking its longest winning streak since September, buoyed by the growing economic prospects.

The pound rose 0.2 percent to 80.44 pence a euro as of 4:30 p.m. in London and accelerated to 80.33 pence, its highest level since November 2012. The sterling has accelerated 0.9 percent over the past six days. The pound also gained 0.4 percent to $1.6856.

The pound has been helped by bets that the Bank of England will hike interest rates given the impressive performance of the U.K.’s economy.  The sterling has advanced 8 percent over the past one year, making it the best performer after the New Zealand dollar of the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The dollar has declined 0.3 percent while the euro has advanced 1.5 percent.

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Most market participants expect the pound to weaken to the lowest level in five years against the dollar in the next 12 months.

“I feel that against the euro we will see 1.25 euros sooner rather than later in light of renewed focus on U.K. interest-rate hikes,” Lee McDarby, a London-based foreign exchange sales executive at Nomura International told Bloomberg. “It will take an even bigger improvement in the outlook of the U.K. to allow the pound to break much outside the $1.66 to $1.70 range.”

The pound received a boost from Wednesday’s data that showed that jobless rate in the U.K. fell more than estimated while industrial output grew the most since 2011. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com