GBP (The Pound, Sterling)
Sterling surged against a basket of major currencies on Wednesday on the back of positive central bank comments relating to UK interest rate hikes coupled with better-than-expected Construction data.
Comments from Andrew Sentence and Charles Bean both indicated they would be in favour of a sooner-than-expected rate hike which would add further support to a bullish pound. The rise could take place as early as May now if market indicators are to be believed and commodity prices rise further.
The CPI construction data which was released yesterday morning came in as much better-than-expected which helped back views that rates were heading higher. Data due out today relating to services PMI both in the euro zone and UK and Non Manufacturing in the US will give a clear indication as to who is quickest out of the blocks in 2011.
Against the USD sterling hit a 12 week high before dropping back a little in the afternoon session; versus the euro sterling climbed back to the previous day’s high of 1.1745
The Euro lost ground from its 3 month high against the dollar as nervousness followed events in Egypt yesterday. All eyes are on the comments following the ECB rate announcement at 12:45. With interest rates likely to remain on hold at 1%, analysts will look towards the tone of the ECB Press Conference for an indication as to when a price hike is likely to occur. Trichet’s comments after the announcement will disappoint if the tone is anything but hawkish.