The Pound (GBP) skyrocketed against its peers on Wednesday following a surprise uptick in the UK’s third quarter GDP.
The ONS reported that the UK economy grew 0.4% over the summer, beating expectations that growth would remain flat at 0.3%.
Investors believe that the rise in GDP increases the odds that the Bank of England (BoE) will vote to raise interest rates in next month’s policy meeting.
The Pound Euro (GBP EUR) exchange rate advanced by around half a cent on Wednesday following the UK’s upbeat GDP report.
However, the single currency is pushing back against Sterling this morning ahead of the European Central Bank’s (ECB) policy meeting later this afternoon.
Markets are particularly focused on today’s meeting as economists predict that the bank will finally announce plans to begin tapering its quantitative easing programme early next year.
Sterling surged by over a cent against the US Dollar (USD) yesterday as investors become more confident that the BoE will raise interest rates in November.
The ‘Greenback’s losses yesterday came despite US data coming in higher than expected, with both domestic New Home Sales and Durable Goods Orders showing impressive growth in September.
However the positive figures seen yesterday may bode well for the release of the country’s third quarter GDP estimate on Friday, which would likely help the US Dollar to recoup some of its losses.
The Pound Canadian Dollar (GBP CAD) exchange rate stuck a new four-month high on Wednesday, with the pairing able to build on its early gains in the afternoon as the ‘Loonie’ was weakened by a dovish policy meeting by the Bank of Canada (BoC).
Sterling jumped by over three cents against the Australian Dollar (AUD) yesterday as both a poor inflation report from Australia and rising confidence in the chances of a rate hike from the BoE next month propelled the pairing close to a five-month high.
New Zealand Dollar
The Pound also made strong gains against the New Zealand Dollar (NZD) on Wednesday, with the ‘Kiwi’ struggling to push back overnight as the domestic trade deficit narrowed by less than expected in September.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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