Pound strengthens amid growth signs
STERLING advanced against the euro and the dollar yesterday, erasing its recent declines, as reports on UK manufacturing added to evidence that the recovery in the British economy is gaining momentum.
The pound appreciated to the strongest level against the euro since January at one stage and climbed to the highest level in nine months versus the US dollar after a partial shutdown of the federal government.
Gavin Friend, a currency strategist at National Australia Bank in London, said. "There's an underlying bid to sterling that's coming from the negative impact on the dollar from the US situation."
Sterling appreciated 0.1pc to 83.52 pence per euro late yesterday after climbing to 83.33 pence at one stage, the strongest since January 17.
"The pound has continued to outperform," Morgan Stanley analysts led by head of global currency strategy Hans Redeker in London, wrote in a note to clients, adding: "We maintain a near-term bullish stance."
Growth signs have convinced the Bank of England to leave its stimulus target at £375bn (€450bn). Its governor said last week that there was no case for more quantitative easing unless the economy was to falter.
The pound rose 6.7pc in the past six months. The euro rose 5.5pc, while the dollar weakened by 0.5pc. (Bloomberg)