The pound surged versus the euro ahead of release of key economic updates by the central bank this week. The sterling appreciated 0.3 percent to trade at 79.73 pence per euro at 9:29 a.m. in London after declining 1.1 percent over the last two weeks. The UK currency rose 0.1 percent to trade at $1.6792 after a five-week run of losses.
Investors also pushed the pound up as they awaited indicators of the future interest rate outlook ahead of Bank of England Governor Mark Carney’s release of Inflation report on Wednesday.
“In terms of key events this week, it would be the Inflation Report,” Michael Sneyd, a London-based foreign-exchange strategist at BNP Paribas SA, told Bloomberg News. “Long sterling is one of the largest positions in G10 FX, but this long sterling positioning has been pared back the last couple of weeks. If we do continue to get an indication from Carney that rate hikes are on schedule for November, then there’s scope for sterling to rebound this week.”
Yield on the 10-year gilt increased 0.02 percentage point or two basis points, to 2.48 percent. On August 8, the rate sunk to 2.40 percent, the weakest level since August 2013.
Meanwhile, the Philippine peso grew by the fastest pace in seven weeks as geopolitical risks eased, spurring demand for assets from emerging economies. The peso accelerated 0.6 percent, the strongest pace since June 19, to 43.865 per dollar. It had earlier declined 1.3 percent over the last three trading sessions, which saw it hit 44.278 on August 8, the lowest level since May 8.
Geopolitical tensions eased after Gaza militants and Israel reached a 72-hour truce. Russia’s Foreign Minister Sergei Lavrov said on Sunday that a ceasefire in Ukraine can’t be ruled out. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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