Pound up as euro remains steady

The sterling strengthened during European trading hours on Thursday following the announcement by the Bank of England of a £50bn expansion of its assets purchase programme, reports nasdaq.com.

As expected, the euro remained steady as investors awaited the latest news on the Greece bailout as well as a decision on interest rates and the European Central Bank’s press conference. The sterling made up ground on both the dollar and the euro after the Bank of England was cautiously optimistic on the British economy, predicting a gradual strengthening later this year, as it left interest rates unchanged.

Peter Kinsella stated that the rise in asset purchases remained in line with expectations but given the economic outlook’s improvement both domestically and overseas he thinks that it will be hard to justify further asset purchases. He added that this will be good news for the pound.

The sterling also benefitted from positive UK trade and industrial production figures for December. Britain’s goods trade deficit contracted much more than was forecast in the final month of last year to its smallest size for 22 months while factories raised their output.

In the wider picture, expectations that Greece would come to an agreement on further austerity measures before a meeting of finance ministers from the euro region helped currency traders brush aside faster-than-anticipated Chinese January trading in Asia’s late trading. That optimism continued through to London hours as the euro began the session at around $1,33, while the Australian dollar rose $1.08 against the buck.