Sterling Soars against Euro and Dollar

The Pound is extending its strong gains that began with a positive boost provided by Tuesday’s budget and has been helped along by newly released minutes from the Bank of England.

Pound Sterling – UK Markets

The Pound has continued to strengthen against the Euro and the US Dollar. At 11am today the GBP / EURO rate was 1.2196. Markets reacted well to the budget on Tuesday and have had their confidence reinforced from the latest Bank of England minutes. The minutes regarding the last rates decision have revealed that one member called for an interest rate increase. Andrew Sentence (Bank of England Monetary Policy Committee Member) voted in opposition to the other seven members to increase rates from 0.5 percent to 0.75 percent. This early signal that for the first time since the recession an interest rate hike was considered has been treated favorably by the markets who are gaining confidence in the UK recovery.

US Dollar – US Markets

The US Dollar has lost out against the Euro over the past 24 hours and is losing a lot of ground on Sterling. U.S. jobless figures which measure unemployment are due later today and may cause some further movement. Federal Reserve officials have maintained a pledge to keep interest rates at a record low for an extended period citing that problems in the Euro zone may harm U.S. growth.

Euro – European Markets

The Euro made gains on the US Dollar overnight although the trend has began to reverse this morning. The Euro is weakening against the Pound to rates not seen since 2008. In an interview, Central Bank President Jean-Claude Trichet has defended the austerity measures being taken by European nations and denied that they could hamper recovery. However, markets are still treating the Euro with a lot of caution.

Other Currencies – Highlights

Australia’s change in Prime Minister from Kevin Rudd to Julia Gillard has triggered advances in the Australian Dollar, particularly against the New Zealand Dollar. It was also the currency that gained the most on the U.S. Dollar yesterday. The Canadian Dollar has continued to drop and has fallen the most in three weeks against the U.S. Dollar following a retail report which revealed retail sales fell five times faster than predicted in April. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000. The rates quoted above are interbank rates. Client rates may vary according to the volume and timing of the trade.