By TraderVox.com
Tradervox.com (Dublin) – The pound has been on demand as debt crisis in Europe aggravated to levels after Spain was degraded on Standard & Poor’s credit rating. Despite UK slipping back into recession, the demand for safety of the pound was high throughout the week. Moreover, speculation that Bank of England might pause its stimulus program has also boosted the demand for the sterling pound for the second week.
The pound is experiencing demand as reports of Spain demotion by Standard and Poor’s was released and reports from US showed that the US economy slowed in the last quarter. The Sterling Pound rose to 22-month high against the euro as traders sought for its safety. It is increased to the highest since September against the greenback after the report showing decline in growth was released.
Steven Barrow of Standard Bank Plc in London said explained the strong pound saying that despite the surprise in UK GDP, the monetary sentiments, and general economic reports from elsewhere seem to be weaker than those in UK hence leading to a demand of the euro. He predicted that if the data from UK stood out as weaker than in other areas, then the pound would have suffered.
The Bank of England meeting on May 9-10 will deliberate on whether to extend the QE program. In their last meeting, the Monetary Policy Committee members supported the current 325 billion-pound QE program and suggested that they first finish it before considering another one.
The pound advanced against the dollar by 0.8 percent on the previous week to trade at $1.6243, it had risen to the highest since December 1 when it touched $1.6258. The Great Britain Pound gained 0.5 percent against the euro to exchange at 81.59 pence per euro. It had earlier reached a high of 81.34 pence per euro, which is the strongest since June 2010.
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