British pound sterling: The sun shines on the UK currency this morning - Across the board strength reported

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Published on Thursday, 16 August 2012 09:08

Written by Will Peters

International Money Transfers at our sister site

Demand for sterling has however been further boosted by news that British retailers posted an unexpected rise in sales in July.

The pound sterling (Currency:GBP) is the out-performer on the global FX space this morning as we get another positive surprise on the data front.

The pound euro exchange rate is 0.24 pct higher on last night's close at 1.2791 at 10 AM in London.

The pound dollar exchange rate is 0.12 pct higher at 1.5703.

The pound Australian dollar exchange rate is 0.22 pct higher at 1.4957.


As the above numbers show the UK currency is registering convincing gains against a range of currencies (AUD = your commodity currency, EUR = Your risk play, USD = Your safe-haven).

Yesterday's revelation that UK unemployment is falling will have been the catalyst for the gains - demand for sterling has however been further boosted by news that British retailers posted an unexpected rise in sales in July, with volumes rising 0.3 pct on month-on-month basus to give an annual increase of 2.8 pct.

That compares to economists' forecasts for a monthly fall of 0.1 pct.

Investors will now be asking - is the UK economy in as bad a position as the official GDP figures suggest?

On the central bank front we see that a senior Bank of England policymaker noted quantitative easing was a better way of kickstarting the economy than further interest rate cuts.

On a visit to Northern Ireland, monetary policy committee (MPC) member Paul Fisher told the Belfast Telegraph: "If we thought [rate cuts] would add more stimulus we would do it but asset purchase through quantitative easing is a more powerful way of aiding the economy … but we're keeping that under review."

His comments came as minutes of the MPC's last meeting a fortnight ago showed that it had voted unanimously to keep its interest rate at 0.5% and its quantitative easing (QE) programme unchanged at £375m.

Despite the unanimous vote on QE, the minutes point to a continued split on the committee.

The eco-data flow out of the UK economy will now have forecasters tempering their views that further stimulus is a given.