The pound rose to its strongest level in over five years against the dollar after data showed that Britain’s manufacturing surprisingly grew the most in seven months.
The sterling rallied 0.1 percent to trade at $1.7127 as of 9:59 a.m. in London after earlier surging to $1.7133, its strongest level since October 2008. The pound also accelerated 0.2 percent to steady at 79.92 pence per euro.
Markit Economics reported that its industry index grew to 57.5 in June from May’s reading of 57. Economists surveyed by Bloomberg News had expected the gauge to fall to 56.8. The data shows that the economy is growing stronger and hence may push the Bank of England to evaluate whether it is time to hike interest rates.
The sterling has advanced 9.8 percent over the past year; making it the best performing currency out of 10 major ones monitored using the Bloomberg Correlation-Weighted Indexes.
The Indian rupee posted its largest gain in over one week after rising fuel prices boosted speculation that the government will remove fuel subsidies and lower budget deficit.
The rupee rallied 0.2 percent to trade at 60.0750 per dollar, the most since June 19, after the state-owned Indian Oil Corp. said on Monday that it will hike gasoline prices to 1.69 rupee (3 U.S. cents) per liter while those of diesel will go up by 0.5 rupees per liter.
The announcement comes after the government recently increased the railway freight charges by 6.5 percent and passenger fares by 14.2 percent on June 20.
“The increase in fuel prices is positive for the rupee,” Gaurav Sharma, a New Delhi-based senior currency analyst at Religare Commodities Ltd told Bloomberg. “The move shows the government’s intent to curb the deficit.”
The ministry of finance forecasts that the budget shortfall will decline to 4.1 percent of the GDP in the year ending March 2015, the smallest deficit in seven years. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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