The pound posted its longest run of gains in three weeks against the euro as investors focused on central-bank monetary policy for clues on the U.K. currency’s future path.
Sterling rose for a third day versus Europe’s shared currency. It extended its advance from the weakest level in more than three months reached on Aug. 24, when equity markets plunged alongside commodity prices.
The euro was weighed down as market tension subsided and after a European Central Bank policy maker said on Wednesday the ECB was ready to extend or expand its stimulus program if needed.
By comparison, traders are still pricing an interest-rate increase by the Bank of England next year.
“The pound is mainly driven by external drivers at the moment,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt.
“The main thing we are looking at is the speculation about ECB monetary policy, which is driving euro-sterling.”
The pound strengthened 0.3 percent to 72.99 pence per euro as of 4:45 p.m. London time. It touched 74.23 pence on Aug. 24, its weakest level since May 7.
Sterling dropped 0.4 percent to $1.5401. The U.K. currency advanced versus the euro after a report showed the U.S. economy grew more in the second quarter than previously estimated.
Gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg and up from the 2.3 percent the Commerce Department reported last month, figures showed Thursday in Washington.
Rate Outlook
Forward contracts based on the sterling overnight index average, or Sonia, show traders are betting on a 25 basis-point increase to the BOE’s main rate in October 2016. Last week, markets suggested they were pricing in a move next August.
The ECB may adjust its quantitative-easing plan if needed as a slump in commodity prices and risks to global economic growth threaten its inflation goal, Executive Board member Peter Praet said on Wednesday. The central bank’s QE program “provides sufficient flexibility to do so, in particular in terms of size, composition and length,” he said.
U.K. government bonds fell for a third day. The yield rose two basis points, or 0.02 percentage point, to 1.97 percent. The 2 percent gilt due September 2025 fell 0.18, or 1.8 pounds per 1,000-pound face amount, to 100.24.
bloomberg.com
Sterling rose for a third day versus Europe’s shared currency. It extended its advance from the weakest level in more than three months reached on Aug. 24, when equity markets plunged alongside commodity prices.
The euro was weighed down as market tension subsided and after a European Central Bank policy maker said on Wednesday the ECB was ready to extend or expand its stimulus program if needed.
By comparison, traders are still pricing an interest-rate increase by the Bank of England next year.
“The pound is mainly driven by external drivers at the moment,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt.
“The main thing we are looking at is the speculation about ECB monetary policy, which is driving euro-sterling.”
The pound strengthened 0.3 percent to 72.99 pence per euro as of 4:45 p.m. London time. It touched 74.23 pence on Aug. 24, its weakest level since May 7.
Sterling dropped 0.4 percent to $1.5401. The U.K. currency advanced versus the euro after a report showed the U.S. economy grew more in the second quarter than previously estimated.
Gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg and up from the 2.3 percent the Commerce Department reported last month, figures showed Thursday in Washington.
Rate Outlook
Forward contracts based on the sterling overnight index average, or Sonia, show traders are betting on a 25 basis-point increase to the BOE’s main rate in October 2016. Last week, markets suggested they were pricing in a move next August.
The ECB may adjust its quantitative-easing plan if needed as a slump in commodity prices and risks to global economic growth threaten its inflation goal, Executive Board member Peter Praet said on Wednesday. The central bank’s QE program “provides sufficient flexibility to do so, in particular in terms of size, composition and length,” he said.
U.K. government bonds fell for a third day. The yield rose two basis points, or 0.02 percentage point, to 1.97 percent. The 2 percent gilt due September 2025 fell 0.18, or 1.8 pounds per 1,000-pound face amount, to 100.24.
bloomberg.com
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