The British Pound appreciated for the fifth consecutive day against the Euro following economic releases which showed that industrial production went up at the quickest pace in three years, denoting that the U.K. economy is strong.
Euro Economy Dips
With the release of industrial production data out of the U.K., the Brits showed that their economy is stronger than that of the Euro region. The Sterling extended gains against the shared currency after the Office for National Statistics revealed that output climbed 0.4 percent in the month of April, after posting a mere hike of 0.1 percent in March. Production advanced 3 percent from the previous year, the most in three years. In France, a similar announcement showed that industrial output contracted 2 percent in April. Analysts stated that the British economy has gathered more momentum than even the International Monetary Fund anticipated and for this reason, they believe the Bank of England may consider raising the costs of borrowing money by as early as March of next year. The British Pound rallied against the majority of its Forex counterparts on speculations an interest rate hike could be possible.
Yen Stronger Than Euro
The Yen rallied the most in close to four weeks against the Euro exchange rate on the likelihood that the Bank of Japan may leave monetary policy unchanged since it’s possible the current level of stimulus could help the economy expand. Traders believe that on the other hand, the European Central Bank may continue to add stimulus in order to ensure the region’s economy doesn’t stall due to low inflation. Economists out of Japan have stated that while the recent data has not been negative, it is not necessary to take action at this time. On the data front, Japanese officials revealed that employees and consumers regained their confidence in the economy in the month of May. The release indicated that consumers expect the negative effects of the sales tax hike to wear out soon. The seasonally adjusted index which measures household sentiment climbed 2.3 points to 39.3. This was the first rise in half a year.
Kiwi Trads Higher
The New Zealand Dollar climbed against the greenback as the announcement of new measures to stimulate the Euro-zone’s economy continued to support risk appetite. The Kiwi was also bolstered by positive inflation metrics out of China, a factor that will help dairy products in the small South Pacific nation increase in price.