Sterling had a strong performance this week building on last Fridays gains and midweek it reached a one-year high against the euro and fresh two-and-a-half year highs against the US dollar. This was primarily due to better-than-expected unemployment levels, which registered 7.1% rather than the forecasted 7.3%. This is only 0.1% short of the threshold set by the Bank of England (BoE) for increasing interest rates. All ears are on the search for any signal as to when the BoE will actually raise interest rates although this is not expected to be anytime soon.
Sterling fell yesterday against the euro due to strong factory output data out of the Eurozone which lends credibility to the belief that we are starting to see the Eurozone achieve sustainable growth, albeit very limited at this stage. This is also supported by the ability of the southern states to raise debt at reasonable interest rates with this week’s auction of €10 billion of Spanish debt being oversubscribed four times. We have a quiet day on the data front today for sterling; however, it is widely expected that the market will be generally sterling positive overall.
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