The British Pound continued to advance against the Euro on speculation that the Bank of England could tighten monetary policy in 2014, especially after recent macroeconomic fundamentals showed that construction and manufacturing activities are up.
Sterling Continues To Rally
The British Pound rose to the highest level in 21 months against the Euro on the possibility that recent economic releases which pointed to growth in the construction and manufacturing sectors could prompt the Bank of England to opt for tighter monetary policies. With the latest data, Markit Economics concluded that the U.K.’s economy expanded 0.8 percent in the months of April to June. And while the Bank of England is predicted to leave the interest rate at 0.5 percent when it issues its policy decision on July 10th, investors raised speculation that the central bank could hike the key cash rate by February of 2015. The Sterling hovered close to the highest in six years versus the greenback even after the U.S. issued positive payroll data on Thursday.
The Australian dollar recouped some of its losses against the greenback after taking a big drop on Thursday. Its decline came about after domestic announcements showed that retail sales missed forecasts. Furthermore, Reserve Bank’s Governor, Glenn Stevens, suggested that the currency is “overpriced” but could take a dramatic turn to the downside. Mr. Stevens intimated that the bank possesses the necessary tools to change the outlook. According to the official figures, sales declined 0.5 percent in May, while economists predicted they would jump 0.3 percent. Other news confirmed that the number of building approvals comprised a surge of 9.9 percent in May, certainly much higher than the predicted 3 percent.
Kiwi Eases Slightly
The New Zealand Dollar eased slightly versus its U.S. peer while the latter advanced due to stellar reports issued on Thursday, adding to evidence the U.S. economy is progressing. The Kiwi stayed range-bound as there were no key economic releases. Chinese news took over the headlines as they revealed that non-manufacturing purchasing manager’s index fell from the previous month. However, the good news denoted that China’s manufacturing sector expanded at the quickest pace in 2014.
Euro Trades Near Five-Day Low
The Euro remained weak on Friday against the greenback during subdued trading conditions. According to experts in Forex trading strategies, The Euro was weighted by comments issued on Thursday by ECB President, Mario Draghi, who reiterated that the bank will leave the benchmark rate at the current low for some time to come.