UK: Pound Sterling rises against Euro and USD

The Sterling’s rise of more than 1 pc against the dollar to a two-month high was matched by a similar appreciation against the euro. This means the pound is worth more than €1.16 now.

Nicola Sturgeon’s party won 64 seats in the Scottish Parliament. This is just one short of the 65 needed for a majority. FX analyst John Hardy at Saxo Bank has stated this means international investors can put referendum fears ‘in the rearview mirror’ and buy more UK assets. quoted him as saying: “Clearly the market was concerned the SNP could get an outright majority and this could shorten the timeline to some eventual new referendum campaign. By falling one seat short, the mandate isn't quite there and it sends the whole referendum scenario over the horizon for investors.”

There is also a strong economic outlook, as well as some wobbles in the US which make the dollar relatively less attractive, again strengthening Sterling.

Francesco Pesole, an FX strategist at ING, said the fundamental picture is one of a strong economy supporting the pound: “Hopes of a strong economic rebound continue to be fuelled by the reopening plans in the UK and this should continue to put a floor under sterling.”

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