UK pound continues to gain ground today against the euro and the dollar, thanks in large part to expectations for the future, and the fact that policy divergence with the eurozone remains expected. The Scottish independent vote gave sterling a boost that is carrying over to today.
The news that Scotland will not be leaving the United Kingdom gave the UK pound a boost at the end of last week, and some of that still lingers this week. The UK pound is gaining traction against the euro and the dollar as stocks improve and as policy divergence with the eurozone continues.
Even though the Bank of England is still engaged in quantitative easing, the reality is that it is expected to slow down soon, especially if signs of economic improvement appear. With the eurozone, there are expectations that more easing will be needed in the coming months, and that policy divergence favors the pound.
There’s a lot going on right now, and the pound is still riding its high from last week. To maintain strength, though, the pound will need to see economic improvement.
At 10:19 GMT GBP/USD is up to 1.6400 from the open at 1.6388. EUR/GBP is down to 0.7831 from the open at 0.7839. GBP/JPY is down to 178.0855 from the open at 178.4550.
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