Pound Posts First Yearly Gains Since 2006

The pound extended its weekly gains today versus the euro and the U.S. dollar, ending the year with the first advance versus both since 2006, as the British economy shows its first evidences of recovery, affecting its currency positively.
After a report surprised investors today showing an increase in U.K. house prices beyond forecasts, the pound posted its first weekly advance versus the greenback since mid November and also managed to extend yesterday’s gains versus the euro, as the real estate sector was one of the most aggravating factors for this year’s crisis in the U.K., the worst since the Second World War. The pound gained 11 percent versus the greenback this year, and performed similarly versus the euro, posting an increase of nearly 8 percent.
The housing sector is certainly bringing optimism towards the British economic outlook for 2010, according to analysts. The fact some analysts considered the pound to be undervalued versus the dollar after it traded in the lowest level in almost 3 months also gave a short term positive effect for the pound’s performance.
GBP/USD traded at 1.6141 as of 18:15 GMT from a intraday rate of 1.6012. EUR/GBP traded at 0.8872 from 0.8918.

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