The Pound rose yesterday towards its highest level in three weeks against the US Dollar after a CBI report raising optimism that the UK economy will avoid a technical recession this quarter.
The report from the Confederation of British Industry (CBI) showed that an index of UK retail sales rose in February and was significantly stronger than expected with a reading of -2 for February, from -22 previously. There was also a more optimistic tone for March.
All this helped to raise optimism that the UK economy will not fall into a technical recession this quarter.
The Pound rallied hit above 1.59 against the US Dollar, reaching a new 3-month high for the UK currency and overall meaning it has gained 2.2% against the Dollar this year.
If the latest PMI manufacturing data released on Thursday shows a strong figure, it too will add to speculation that the economy is recovering from the fourth quarter contraction.
The Pound may be set for a move towards 1.60 should it break through the 200-day moving average.
After As Standard & Poor’s downgraded Greece’s credit rating to selective default, there was increased demand for the relative safety of UK debt and as UK Gilts rose as a result.
Whilst fairing well against the US Dollar, the Pound fell against the Euro, trading through 1.18 towards its weakest level in 12-weeks.
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