The pound reached the highest level in almost a month versus the U.S. dollar and gained versus the euro after Bank of England statements regarding its strategy to stimulate the faltering British economy revived investors’ confidence in the United Kingdom’s currency.
After the Bank of England officials’ declarations indicating that the asset-purchasing program will not be extended further, as it has been previously, the confidence towards the U.K.’s currency improved, as interest rates in the country also remained unchanged, helping traders to be more attracted to inject capital in the British Isles. The pound rose versus the euro, rebounding from a one-week low, and higher-yielding currencies also declined as a rally in stocks that lasted five days was halted as concerns regarding the Chinese economic recovery emerged.
Bank of England’s strategic change was not a consensus among analysts, since a significant amount of them bet on the extension of the asset-purchase program, which would be definitely weighing negatively on the pound’s outlook. Currently, the expectations towards an economic recovery in the U.K. are more optimist, since Eurozone countries like Germany, one of the main immediate U.K.’s trading partners is also rebounding, fact which could accelerate the process of recovering for the Northern European nation.
GBP/USD traded at 1.6623 as of 12:28 GMT from a previous rate of 1.6529 yesterday. EUR/GBP traded at 0.8755 from 0.8806.
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