The Great Britain pound was the second-best performer on the Forex market this week after the New Zealand dollar. It was the second week of gains for the sterling. The UK currency was gaining on the euro for eight consecutive sessions — the longest stretch of gains since April 2010.
The sterling started the week a bit soft but turned to the upside after the very positive employment report that suggested possibility of an interest rate hike in the near future. Indeed, Bank of England Governor Mark Carney suggested that he may start tightening monetary policy sooner than the market is counting on. Both these factors were the major driving forces for the pound’s rally.
While the BoE just considers raising interest rates, the Reserve Bank of New Zealand has already started increasing borrowing costs and continued to do so this month. What is more, the RBNZ said that it will likely extend the cycle of rate increases. This allowed the New Zealand currency to become the best performer this week.
Meanwhile, the Bank of Japan did nothing at its policy meeting, while its chief said that Japanese policy makers may consider making monetary policy even more accommodative in case the euro continues to drop further. Such comments resulted in weakening of the yen.
GBP/USD jumped from 1.6805 to 1.6970 (1.0 percent) after touching the weekly low of 1.6738 GBP/JPY slipped from 172.23 to 170.96 but bounced to 173.07 by the weekend. EUR/GBP sank from 0.8116 to 0.7977 (1.7 percent) — the lowest weekly close since September 2012.
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