Pound Advances Most in Two Months Against the Euro

By TraderVox.com

Tradervox (Dublin) – The pound has gained most against most majors prior to a Bank of England’s meeting tomorrow registering the strongest advance against the euro in two months. This bullish trend has been sparked by two reports from UK one showing that the UK services sector unexpectedly grew last month and the other showing that house prices went up in the same month. The Bank of England meets tomorrow to review its monetary policy.

According to Neil Jones of Mizuho Corporate Bank Ltd in London, the pound is performing well due to the positive reports in the services sector and the house-price data. Tomorrow’s BOE meeting also some effect on the pound trend as traders are keeping a close eye to see what the BOE members think about the UK economy.

The sterling pound has strengthened against most of its majors but it decreased against the US dollar as Fed minutes indicated that the economy is on the right track by dismissing speculation about a third quantitative easing program. The report showing UK services activity registered a growth from 53.8 in February to 55.3 in March. The other report on house price data indicated that the house prices increased by 2.2 percent in March.

The sterling pound increased by 0.5 percent against the euro to exchange at 82.73 pence per euro during the European session, this is the strongest it has been since January 16. However, effect of the two reports were not enough to shake the dollar gain against major currency where it gained 0.3 percent against the pound to trade at $1.5874 per pound.

Most analysts have also associated the pound advance against the euro with the ECB President’s comment on the nature of the euro region’s economy. Draghi had indicated in his Frankfurt address that the euro region economy remained susceptible to a downside risk despite the strong efforts made to bring the economy back to normal. The reduced interest in Spain’s bonds in an auction is also another factor that has led to the decrease of the euro against the pound.

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