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Saturday 3 December 2016

Pound still continues rise after election bounce

Eshe Nelson

Published 13/05/2015 | 02:30

File photo dated 07/11/14 of money in a wallet as savers' account balances have still not fully recovered from last year's Christmas spending sprees, new research suggests. PRESS ASSOCIATION Photo. Issue date: Thursday April 30, 2015. Across Britain, the average savings balance in the first three months of this year stood at ?16,690, which is more than ?1,000 lower than the typical balance during the previous quarter at ?17,945, according to Halifax's Savings Review. Nearly one in four (24%) people surveyed said they had added nothing to their savings in the first three months of the year - and 26% said they have raided their accounts over the period. People living in the South East of England were found to have raided the most from their savings recently, at ?1,424 typically - although they also had the highest average balances, at ?19,489. Spending on holidays was the most popular reason for dipping into savings. Everyday household expenses were also a common reason for raiding savings, with people saying they had used their pots to cover costs such as home or car repairs, unexpected utility bills, because they had overspent on their current account and to pay off debts. See PA story MONEY Savings. Photo credit should read: Chris Radburn/PA Wire
File photo dated 07/11/14 of money in a wallet as savers' account balances have still not fully recovered from last year's Christmas spending sprees, new research suggests. PRESS ASSOCIATION Photo. Issue date: Thursday April 30, 2015. Across Britain, the average savings balance in the first three months of this year stood at ?16,690, which is more than ?1,000 lower than the typical balance during the previous quarter at ?17,945, according to Halifax's Savings Review. Nearly one in four (24%) people surveyed said they had added nothing to their savings in the first three months of the year - and 26% said they have raided their accounts over the period. People living in the South East of England were found to have raided the most from their savings recently, at ?1,424 typically - although they also had the highest average balances, at ?19,489. Spending on holidays was the most popular reason for dipping into savings. Everyday household expenses were also a common reason for raiding savings, with people saying they had used their pots to cover costs such as home or car repairs, unexpected utility bills, because they had overspent on their current account and to pay off debts. See PA story MONEY Savings. Photo credit should read: Chris Radburn/PA Wire

The pound sterling has rallied the most in almost five years versus the dollar since last week's general election and as industrial production unexpectedly increased.

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Sterling has climbed almost 3pc against the US currency since Britain's May 7 vote surprised investors by producing an outright majority for the Conservative Party.

The pound weakened for the first time in four days versus the euro yesterday, slipping 0.1pc to 71.66 pence to the euro, after strengthening 4pc in the previous three days.

The UK currency has gained 3pc in the past week, making it the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes.

With fears of a deadlocked UK parliament gone, the pound surpassed its 200-day moving average versus the dollar yesterday, which can indicate a shift in its trend.

The last time it crossed was in August. UK government bonds declined for a second day as a global rout in fixed-income markets extended.

"The pound is trading on a firmer footing after the election risk premium was removed," said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ in London.

"The UK economy still appears to expanding solidly, providing support for the pound. We expect the pound to continue to firm in the near term."

The three-day gain of 2.9pc against the dollar is the biggest since July 2010.

The 200-daily moving average is at $1.5624. When the average was breached in August, the pound accelerated a decline that continued until April.

The weakness of the US currency could provide some attractive levels to buy the dollar, Mr Hardman said.

"The US dollar is starting to look overdone so we'd be cautious about chasing pound-dollar higher from here," he added. Sterling is more likely to significantly appreciate against the euro than the dollar, he said.

The Bank of England will publish its quarterly Inflation Report today, which will include economic growth and inflation projections that policy makers use to help inform their view on future borrowing costs.

Before then, data will show a decline in Britain's unemployment rate and an increase in average wages, according to the estimate of analysts surveyed by Bloomberg.

Irish Independent

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