Britain’s Recovery Makes Pound Stronger

The Great Britain pound rose this week, reaching the highest level since August 2009 against the Japanese yen, on hopes that accelerating economic recovery will allow policy makers to raise interest rate earlier.
The sterling started this week poorly and there were doubts that optimistic forecasts were right. Yet in the end optimism was warranted as the Bank of England inflation report revised already good projections positively. This led to speculations that the central bank will tighten monetary policy sooner than was expected.
The pound rose for the second week against the US dollar, which was weakened by prospects of prolonged stimulus, and versus the yen, which continues to demonstrate significant weakness. The pound was unable to outperform the euro, but managed to trim losses significantly.
GBP/USD was up from 1.5998 to 1.6111, bouncing from the weekly low of 1.5853. GBP/JPY jumped from 158.72 to 161.46. EUR/GBP ticked up from 0.8343 to 0.8371, but dropped from the weekly high of 0.8462.

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