Pound Rises on UK Growth amid Spain Woes

By TraderVox.com

Tradervox.com (Dublin) – The sterling pound has strengthened against the dollar for the first time in four days after the UK government report showed that the economy has contracted less than it was estimated, signaling UK economy is improving. The disposable income also increased last month. The UK currency also improved against the euro to its strongest level in three weeks after protests erupted in Spain calling for the reversal of austerity measures. The government report showed that the UK economy contracted by 0.4 percent in the second quarter compared to the 0.5 percent projected by economists.

Simon Derrick, who is the Chief Currency Strategist at the Bank of New York Mellon Corp, said that the numbers from the Office of National Statistics have boosted sentiments that the UK is the preferred safe haven currency from the troubles in euro zone. He pointed out that the troubles in Greece and the continue protest in Madrid are the main focus. In Spain, protesters started to demonstrate yesterday near parliament building and have continued today despite police detaining some of the protesters. The cabinet meets today to pass austerity measures aimed at curbing the debt crisis in the country.

According to Paul Robson, a Foreign Currency Strategist in London at Royal Bank of Scotland Group Plc, said that the continued worries in Europe will only drive investors to buy more sterling. The pound has advanced by 2.2 percent this year among the top ten traded currencies in developed countries. The euro has clashed 3.4 percent while the US dollar has dropped by 2.5 percent.

The sterling pound advanced against the dollar for the first time in four days by 0.2 percent to exchange at $1.6203 at the start of trading in London today. The currency traded 0.3 percent low against the yen exchanging at 79.37 pence per euro. It had earlier appreciated to its strongest since September 6 of 79.24.

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