Pound Climbs on Signs of Stability

The Great Britain pound jumped yesterday and retained its gains today after the macroeconomic data showed that Britain’s economy is stabilizing. At the same time, the sterling weakened versus the euro.
The Consumer Price Index remained at 2.7 percent and core inflation stayed at 2.6 percent in November. The Retail Price Index was at 3 percent last month, a little below the October’s 3.2 percent. The House Price Index showed growth by 1.5 percent in October, somewhat slower than the previous month’s 1.7 percent. The data was largely in line with forecasts.
The pound was also supported by hopes that the United States will avoid the fiscal cliff. Such hopes attracted investors to riskier assets. At the same time, optimism about the situation in the eurozone weighed on the sterling, reducing demand for the currency as a safe haven and allowing the euro to gain on the pound.
GBP/USD climbed from 1.6201 to 1.6250 yesterday and stayed at that level as of 1:06 GMT today. GBP/JPY rose from 136.81 to 137.09 at the current trading session, reaching the highest rate since April 2011. Meanwhile, EUR/GBP traded at 0.8134 following yesterday’s rally from 0.8122 to 0.8137.

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