Pound Edges Higher

The Pound ended last week higher against many currencies, posting its first weekly gain against the Euro for 6 weeks, and reaching its highest level against the US Dollar for over 3 months.

Despite better than expected labour market figures in the USA on Friday, the US Dollar was the currency which weakened the most, with rates for sending money to the USA nearly 3 cents better than at the beginning of the week.

This came against a backdrop of the French president Francois Hollande making a statement declaring the “We all have instruments of stability and solidarity.” Claiming that the Euro zone debt crisis is now over.

Unemployment still has given then the markets some confusion with its high level of shifting patterns.

There were also gains for the Pound against the Australian, New Zealand and Canadian dollars, and sterling has gained the most among 10 major currencies tracked by Bloomberg, over the last 3 months, with a 5.3% effective gain when measured across a basket of other currencies.

This week there is a lack of important data out, particularly early in the week. Today’s only data of note is Swiss GDP, which has already come out slightly better than expected and strengthened the Swiss Franc.

Before next week’s Bank of England minutes and inflation figures, this week could therefore be an opportune time for those of you looking to send money abroad or fix your rate in advance. The Pound has benefited from better economic releases in the last few weeks, and the declining likelihood of further Quantitative Easing, but history tells us that gains can quickly be eroded if sentiment changes. The UK economy is far from out of the woods yet so don’t be caught out by assuming that the Pound will continue to flourish. New Bank of England Governor Mark Carney takes office on the 1st July and currency rates are bound to be sensitive to any change in policy from the central bank too.