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GBP Hits 7 Month High Against US Dollar

GBP Hits 7 Month High Against US Dollar

It was another good day for Sterling yesterday as we saw it rise for an 8th consecutive day yesterday and make gains on all of the major currencies with the exception of the Norwegian Kroner.

We started the day off with the Bank of England revealing that they had voted unanimously to keep rates on hold. Of course, this was fully expected. However, delving into the minutes of the meeting, things started to look extremely rosy in the British Economic garden and all signs point towards an interest rate hike in 2016. Policymakers believe that inflation will increase later in the year and labour data showed a much higher increase in average weekly earning than expected. We should see a decline in retail sales today but this is nothing to be alarmed by as this figure has been rising impressively as of late.

The Fed also elected to keep rates on hold yesterday but the outlook was more dovish than expected leading to a sharp decline in the Dollar and Sterling reaching 7 month highs. Rate hikes are still expected this year but not until September. The minutes revealed that unemployment has fallen and wages are starting to increase but they need further improvement in the labour market and inflation to move nearer to 2% to be more comfortable with a hike.

In Europe, the focus is still on Greece, despite the fact that it does not look like there is a huge amount of talking at the moment. The Greek Central Bank warned yesterday of an unprecedented slump unless a deal is agreed soon.

In the other side of the world, New Zealand’s economy expanded at its weakest pace in 2 years as the country was impacted by slumps in agriculture and the mining industries.

Today’s main data reports are the retail sales from the UK and CPI from the US.

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