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Posted May 29th, 2013 by Charles Purdy

The US dollar continues to strengthen | Smart Daily Currency Note

GBP/USD – 1.5097

Sterling held its own after the bank holiday apart from against a well-performing US dollar yesterday afternoon. Though the UK currency fell against its American counterpart following strong US consumer confidence data, sterling steadily extended it’s rebound from last week against most of it’s major peers as expectation increases that the Bank of England will gradually move away from it’s quantitative easing cycle. As reports throughout the week are forecast to describe a further extension of credit for the private sector as well as rising house prices, sterling could be supported approaching the Bank of England’s interest rate decision in just over a week. If more central bank officials move towards supporting a reduction in Britain’s asset-purchasing programme, the recently fragile currency has the potential to outperform in this quarter. With Confederation of British Industry sales data emerging today as well as word from one of the members of the Monetary Policy Committee, stay in touch to monitor progress throughout the week.

The US dollar rose to session highs against both the euro and Japanese yen whilst strengthening against all it’s major trading partners including sterling as the latest consumer confidence survey and house price release yesterday afternoon exceeded expectations – rising to a five year high for May as sentiment was boosted by a better business outlook and job opportunities. The consumer confidence index climbed to 76.2; the highest since early 2008, whilst house prices are at their highest level in seven years giving consumers more confidence to spend. The news has added fuel to speculation the Federal Reserve may taper back it’s quantitative easing programme in the near future as the world’s largest economy posts more positive data reports. With more movement expected on Thursday as GDP data will be released alongside US jobless claims figures (and unemployment being mentioned as a key factor in Federal Reserve monetary policy decisions), stay on top of developments by talking to your trader now.

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