The pound rose the most in a week against the euro since July on speculation that rising UK consumer confidence boosts the case for the central bank to increase interest rates before the European Central Bank.
The UK currency jumped 0.2 percent to trade at 79.30 pence per euro as of 4:55 pm in London, after earlier touching 79.28 pence, its highest level since August 13. The currency has advanced 0.8 percent this week, its strongest gain since the week through July 4. The sterling remained slightly unchanged at $1.6588, up 0.1 percent since last week, ending its seven-week drop against the dollar.
“It was made all the clearer by Draghi’s speech that inevitably whenever the BOE do hike, it will be ahead of the ECB,” Jane Foley, a London-based senior foreign-exchange strategist at Rabobank International, told Bloomberg News. “That message has been instrumental really in providing selling opportunities every time euro sterling goes to about the 80 pence level.”
GfK NOP Ltd reported that its consumer sentiment gauge gained 3 points to 1 in August, which matched June’s reading that was the strongest since March 2005. Measures of consumer’s outlook for their personal financial condition and the economy in the next 12 months also advanced.
Meanwhile, the European Union’s statistics office said that euro-area consumer prices grew 0.3 percent in August from the previous year, compared with July’s 0.4 percent advance. This was the weakest rate since October 2009.
Yield on the target 10-year gilt held steady at 2.37 percent, a drop of 23 basis points, or 0.23 percent, in August. The value of the 2.75 percent bond that matures in September 2024 stood at 103.38 percent of its face value. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org