By TraderVox.com
Tradervox.com (Dublin) – The sterling pound advanced against the euro as concerns on worsening debt crisis rose. The pound increased as signs of recovery started to show following positive UK data last week. It emerged from a near two-month low against the euro as coalition government in Greece failed to agree on austerity measures. The pound has also gained against the US dollar, reaching a four-month high last week as UK services expanded in August and manufacturing recovered. These positive data from the UK are indicative of a recovering economy and speculations of quantitative easing measures are receding.
According to Peter Kinsella, a London-based Senior Foreign Exchange Strategist at Commerzbank AG said that the UK data is on the stronger side, hence boosting the sterling against the euro. He projected that the solutions in Europe will not be enough to push the euro above 80 pence. The pound has been among the best performers last month, increasing by 0.7 percent where the US dollar fell by 1.5 percent and the euro climbed by 2.9 percent. Economists expect the strong performance by the pound to continue today, when the UK trade deficit report is released. The market is expecting the deficit to shrink to 9 billion pounds. Another report on September 12 is expected to show that UK unemployment rate is at 8 percent according to market estimates.
The effects of Greece crisis on the euro was larger than the effect of a report released yesterday showing that the UK business confidence dropped to a new low in August. The sentiment gauge dropped to 89.1 in August from 93 in July according to a report by BDO LLP yesterday, this is the lowest it has been since the gauge was introduced in 1992. However, this did bar the pound from increasing against the euro by 0.2 percent to 79.87 pence per euro. The pound was trading at $1.5996 against the dollar, after it had closed the week at $1.6034.
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