GBP gains support with improved economic outlook

Daily Currency Update

On Wednesday the UK Halifax House Prices for January rose 2.5% in the year to January, the strongest annual growth rate for a year. Deputy Governor of the Bank of England Sarah Breeden highlighted that the UK central bank is in no rush to cut interest rates. Adding that she was now thinking about how long interest rates would need to stay at their current level instead of rising further.

It is expected that the European Central Bank could start cutting interest rates by April amid falling inflation in the Eurozone, weighing in on the Euro.

Yesterday, the Pound Sterling strengthened following the release of the UK construction data. The pound also saw an uptick against the US Dollar with rising house prices in the UK, the data supported the view that the Bank of England may not be likely to cut interest rates any time soon.

UK Services Sector and Construction companies appear to be more optimistic about fading recession risks. Whereas the Euro has shown to be weaker, with the Eurozone economy underperforming due to labor market conditions, consumer spending, and manufacturing activity. The recent poor industrial production could add some pressure in the Euro.