U.K’s sterling staged a rebound from its previous session’s downtrend against most of its major rivals on Tuesday in early European trading as most European stock markets opened higher, which revived investors’ appetite for risk. The pound rose to a 4-day high against the dollar and the yen.
As of 4:02 am ET, U.K.’s FTSE 100 Index was up 1.44% or 69.41 points at 4,892.42. Meanwhile, France’s CAC 40 index climbed 1.8% in early deals and Germany’s DAX rose 1.3%.
The results of the latest economic survey published by the British Chambers of Commerce also pushed the pound higher in the session.
The British economy will expand between 0.6% and 0.7% in the second quarter, the British Chambers of Commerce reportedly said in its quarterly economic survey released today. The economy grew 0.3% in the first quarter.
BCC Chief Economist David Kern said a very tough fiscal policy is in place and this means the risks of a double-dip recession is greater. It makes it more necessary for the Bank of England to keep interest rates low.
The Bank of England is set to announce its interest rate decision on July 8. The central bank is widely expected to leave the key rate unchanged at a record low of 0.5%.
Bouncing back from its early Asian session’s 5-day low of 131.92 against the yen, the pound appreciated by more than 1.3 percent to reach a 4-day high of 133.71 around 3:55 am ET and a move above the 134.0 resistance could set its strongest mark in 8 days. The pound-yen pair is presently quoted at 133.59.
Japan’s leading index fell for the second consecutive month to 98.7 in May, data from Cabinet Office showed today. In April, the index had dropped to 101.7, which was the first fall since February 2009. Economists were expecting the index to fall to 98.9.
The pound that slumped to a 5-day low of 1.6044 against the Swiss franc in early Tuesday Asian deals reversed its direction around 2:50 am ET. The pound-franc pair reached as high as 1.6157 after an hour and the next likely target level is seen at 1.6190 level in near-term. The pair is presently quoted at 1.6140.
Swiss consumer price inflation slowed to 0.5% in June from 1.1% in May, data released by the Federal Statistical Office showed today. The rate was much smaller than the expected figure of 0.9%.
On a monthly basis, prices fell 0.4% in June, which was slightly faster than a 0.1% decline economists had foreseen.
On the flip side, the pound breached its recently exhibited choppy trend versus the euro in early European trading and declined to as low as 0.8297 around 4:05 am ET. The euro-pound pair is presently quoted at 0.8289.
Erasing most of its Asian session losses, the pound advanced to a 4-day high of 1.5209 against the US dollar by 3:35 am ET, up from a 5-day low of 1.5084 hit earlier in the Asian session. The cable is presently worth 1.5184 and a move above the 1.5230 resistance could set its strongest level in more than 2 months.
Looking ahead, the U.S. Institute of Supply Management is scheduled to release the results of its non-manufacturing survey at 10:00 AM ET. The non-manufacturing index is likely to show a reading of 55 for June.