Pound Surges to 21-Month High Against the Euro on Strong Construction Data

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Pound Surges to 21-Month High Against the Euro on Strong Construction DataThe pound rallied to its highest level in 21 months against the euro after data showed that the British construction sector grew faster in June, indicating that the economy continues to gain strength.

The sterling also got a boost from another report that showed that the gauge of housing activity surged in July, pushing the currency to a five-year high versus the greenback. The positive economic reports boosted speculation that the Bank of England may decide to hike interest rates soon. The sentiment has gained backing from none other than the central bank Governor Mark Carney who was quoted in June as saying the time to return the rates to normal is getting closer.

The pound rallied 0.2 percent to trade at 79.59 pence per euro after earlier surging to its highest level since October 2012. The U.K. currency accelerated 0.1 percent to $1.7164 as of 10:09 a.m. in London after earlier jumping to $1.7177, the most since October 2008.

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The Markit Economics reported that the Purchasing Managers’ Index advanced to 62.6 from May’s reading of 60. This is the strongest level since February and exceeded the economists’ forecast for a drop to 59.8, according to Bloomberg. The reading is still above 50 mark which divides expansion from contraction.

The Indian rupee rose the fastest in over six weeks as investors expressed confidence that the new government will roll out policies aimed at boosting economic growth in its budget next week. The budget will be the first one under Prime Minister Narendra Modi’s government since he took office.

The rupee surged 0.6 percent to trade at 59.6937 per dollar in the financial capital of Mumbai, the most since May 16. 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