On Thursday the Pound reached a new three-week high against the Euro, even after the negativity surrounding an increase in National Insurance Contributions.
However, the upside in the Pound came as a result of hawkish comments from the Bank of England as it claimed that the economy had met the criteria to begin tightening monetary policy, which could mean that the rate will increase next year. At the end of trading, according to the Foreign Exchange Market, Sterling finished at 1.1709 against the Euro and 1.3837 against the US Dollar.
The Euro lost some ground yesterday after it was announced that the European Central Bank would reduce the speed of its bond buying programme instead of slowing down crisis-era aid. The ECB insisted that this was not tapering although the move took a different approach to the Federal Reserve and the Bank of England and that was the likely reason for the downturn in the EUR.
The US Dollar experienced losses yesterday as market sentiment improved, reducing demand for the safe-haven currency. Following the ECB’s decision, risk appetite increased and this was also supported by news that US jobless claims had also hit a new low during the pandemic, placing further pressure on the currency.