Pound Surges to a 11-Week High on Strong UK Housing Prices Data

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Pound Surges to a 11-Week High on Strong UK Housing Prices Data
Pound Surges to a 11-Week High on Strong UK Housing Prices Data
Pound Surges to a 11-Week High on Strong UK Housing Prices Data

The pound hit its strongest level in 11 weeks versus the euro after the European Central Bank President Mario Draghi revealed that the bank may increase monetary stimulus in June if necessary, lowering the demand for the 18-nation currency.

The sterling advanced 0.3 percent to trade at 81.79 pence a euro as of 4:44 p.m. in London after earlier touching 81.69 pence, its highest since February 17. The UK currency remained slightly unchanged at $1.6949 after earlier touching $1.6975. It rose to $1.6996 on May 6, its strongest since August 2009.

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“It’s all about Draghi,” Stuart Bennett, a London-based head of Group-of-10 foreign-exchange strategy at Banco Santander SA, spoke to Bloomberg. “The caveat is always ‘if needed’ but it was just enough for the euro bulls to give up this attack and that’s what euro-sterling is driven by.”

The pound was fuelled by data released on Thursday that showed that U.K.’s home prices gained in April. Investors also speculated that the Bank of England may hike interest rates by April. The Britain’s central bank retained its Official Bank Rate at 0.5 percent in line with predictions by 51 economists surveyed by Bloomberg News.

The European Central Bank retained its main refinancing rate at a record low of 0.25 percent, also as expected by most economists.

“The Governing Council is comfortable with acting next time, but before we want to see the staff projections that will come out in the early June,” Draghi told press in Brussels. “There wasn’t a decision today. It’s a preview of the discussion we will have next month.”

House prices in Britain surged 2.3 percent in the three months ended April from the previous quarter, reported Halifax. 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