The strengthening action of pound against euro

The latest reports on the foreign exchange have put the pound at its highest when compared with euro. In fact, this change has been notified as the greatest monthly increase within a year along with enhanced levels of confidence among consumers, raised prices of houses in the month of August and more approvals of mortgage in July. The currency of UK has increased around 0.6 percent in comparison with its major competitors in the month of August and the Bank of England will be increasing the rates of interest much before the predicted time. The tendency of the investors to increase the bets against the enhanced cost of borrowing money has also added to the positive future of sterling. Besides this, the bonds of UK government have also undergone certain changes due to this ten year hiatus that pound has reached since August 2011.

According to Lee Hardman, a currency expert in Bank of Tokyo-Mitsubishi of London has commented that the rise in the short rates is primarily responsible for the phenomenal growth of pound. However, he has also stated that the situation may turn around at any time. The statistics indicate that the increase in pound is rated at 0.1 percent when compared with 85.33 pence per euro and this gain is considered as the highest since July 2012. Although, pound has hit an extremely high note in this month, the situation may change rapidly during the next three months as Hardman puts it and reach a low note by the end of this year.

The strength of pound has enhanced about 5.6 percent during the last six months and emerged as the top winner among the currencies of ten developed nations monitored by Bloomberg Correlation Weighted Indexes. Similarly, the British Chambers of Commerce has enhanced the forecasts of the economy and stated that the GDP is set to increase at 1.3 percent, which is a record high against the 0.9 percent growth predicted earlier. The way in which GBP has raised in this month is much higher when compared with dollar and euro. Due to these movements, the Bank of England has kept the rates of interest at an extreme low of 0.5 percent until now are set to announce their next decision by the first week of September.

The prices of houses have risen to a record high in UK and the number of mortgages that were lent in the recent times has also increased since March 2008. The policymakers are watching these actions very closely and the decisions are going to be affected according to the same. The changes in the currency of the developed nations not only affects the economy of a country, but leads to significant changes in the ways in which the currency is traded across the world. With a major rises in the rate of pound in comparison with its rivals the foreign exchange market is going to experience the effects to a great extent and traders should find new ways to make profit particularly all those people who have invested with GBP and expecting good returns.