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Pound sterling hits six-week high against US dollar as UK economy expands faster than expected Pound remains near multi-week highs after UK economy expands faster than expected
(35 minutes later)
The pound hit a fresh six-week high against the dollar on Thursday after official figures showed that the UK economy had expanded by 0.6 per cent in the final quarter of last year, faster than expected. The pound remained near a six-week high against the dollar on Thursday after official figures showed that the UK economy had expanded by 0.6 per cent in the final quarter of last year, faster than expected.
Sterling rose by around 0.6 per cent to $1.2637 after the data was released, having earlier in the session already hit its highest level against the buck since the middle of December. Sterling was trading around 0.6 per cent higher on the day, at $1.2637, after the data was released, having earlier in the session hit its highest level against the buck in six weeks.
It was also trading at a more than four-week high against the euro at €1.1781, partially helped by investor hopes that UK Prime Minister Theresa May’s meeting with US President Donald Trump, scheduled for Friday, could sow the seeds for the swift creation of a trade deal. It was also trading near a four-week high against the euro at €1.1781, partially helped by investor hopes that UK Prime Minister Theresa May’s meeting with US President Donald Trump, scheduled for Friday, could sow the seeds for the swift creation of a trade deal.
The pound has endured a turbulent ride over the last year and despite some relief in January, it remains around 15 per cent weaker against the dollar than where it was when the UK voted to leave the European Union in June.The pound has endured a turbulent ride over the last year and despite some relief in January, it remains around 15 per cent weaker against the dollar than where it was when the UK voted to leave the European Union in June.
Economists have also warned that volatility in the currency is unlikely to end any time soon. Some see sterling slumping as low as $1.16 by autumn before cautiously recovering as clarity emerges on Brexit and what it will mean for the UK economy.Economists have also warned that volatility in the currency is unlikely to end any time soon. Some see sterling slumping as low as $1.16 by autumn before cautiously recovering as clarity emerges on Brexit and what it will mean for the UK economy.
Unicredit analysts on Thursday said that despite the recent rebound, they deem it too early to turn bullish on the pound.Unicredit analysts on Thursday said that despite the recent rebound, they deem it too early to turn bullish on the pound.
“In our view, this picture still points to further volatility rather than a much clearer upward trend for [the pound against the dollar] over the coming months,” they said.“In our view, this picture still points to further volatility rather than a much clearer upward trend for [the pound against the dollar] over the coming months,” they said.
The fourth quarter growth figure which was published on Thursday, was ahead of analyst forecasts for a 0.5 per cent expansion, and means that the UK was likely the strongest growing economy in the G7 last year.
However, most forecasters - including the Bank of England and the Office for Budget Responsibility - still expect the economy to slow down significantly in 2017 due to a combination of higher inflation hitting consumer spending and also weaker business investment owing to uncertainty over Brexit.