The British currency reached the $1.66 mark and the highest level against the euro since last December, after an index of U.K. service industries posted the first expansion in a period of more than twelve months. The Australian government reported that the economy unexpectedly grew in the first quarter, improving traders’ confidence globally that other countries may follow Australia’s economy, posting positive numbers for the next quarters. The pound sterling suffered massively the consequences of the credit crunch, reaching the point of being traded one to one against the euro, but since domestic and international data indicated that the global slump is easing, the pound entered a strong recovery trend.
Two main reasons would be behind the pound’s rebound, according to specialists. The rise of confidence in world markets is obviously helping the pound to reach higher levels, but the fact that the greenback is under pressure could be the main reason behind the British currency uptrend. Even if the national data in Britain is still not very optimistic, the actual drive in international markets is favoring the pound for the moment.
EUR/GBP fell to 0.8594 from 0.8634. GBP/JPY remained stable while GBP/USD rose to 1.6552 from 1.6400.
The dollar continued its bearish trend against a basket of currencies after a report on U.S. pending home sales posted the third consecutive monthly rise, improving optimism on markets and extending the current risk appetite wave.