Long live our noble Pound
Sterling gained ground versus the US Dollar for a second day yesterday and continues to move away from last week’s multi-month low. It is being lifted by improved risk sentiment in global markets and by the announcement from Japanese insurers Mitsui Sumitomo Insurance that they had agreed to purchase British Insurance company Amlin PLC for the sum of just short of £3.5 billion in a cash deal.
This news gave Sterling the head of steam it needed and was up by up just over 1.6% against the US Dollar, 1.2% versus the Euro and 1.5 percent against the Yen, with financiers cutting back on poor bets in the Pound. The market is now starting to shift its focus to Thursday’s Bank of England Monetary Policy Committee (MPC) meeting and the sub release minutes from the meeting. Last month just one MPC member voted in favour of an immediate rate hike.
Europe’s data releases were quiet yesterday. However, one key release came out in the form of Gross Domestic Product (GDP) which increased by 0.4% for the last quarter and 1.5% on the year; both were 0.1 and 0.3% above expected results respectively. This suggests the Eurozone has grown more than expected due to a surge in consumer spending and exports.
With issues in Greece still on the back burner for now, the ECB are predicting a continued recovery, granted at a slightly slower pace as the impact of China and global economic slowdown causes a drag. The Euro weakened slightly over the course of the day, which proves positive as it needs to ensure it remains competitive and drive exports. With few releases for the bloc today, any movement against the Euro will come from GBP production data.