Pound Surges Up Against Majors
Wednesday, the British pound edged up against other major currencies as strong U.S. corporate earnings boosted investor sentiment. The pound soared to a new multi-month high against the dollar, new multi-week high against the yen and an 8-day high against the franc.
Intel Corp. said Tuesday after the markets closed that it swung to a $2.9 billion second quarter profit, helped by higher revenue, sharply improved margins and the absence of a hefty charge that it took in the prior year quarter as a result of a fine imposed by the European Commission.
The company’s quarterly earnings per share also came in above analysts’ expectations as did its quarterly revenue. At the same time, the company forecast third quarter revenue above analysts’ current consensus estimate and raised its gross margin outlook for the full year 2010.
The pound also rose as a report showed today that the number of people claiming Jobseeker’s Allowance in the U.K. declined more than expected in June.
The Office for National Statistics reported that the number of people claiming Jobseeker’s Allowance fell by 20,800 in June from May to 1.46 million. The decline was larger than the expected drop of 20,000. The claimant count rate decreased to 4.5% from 4.6% in May. The rate matched economists’ expectations.
Asian stocks surged up today on the back of a buoyant close on Wall Street overnight following encouraging quarterly earnings.
The European market too opened higher today, but some stocks pared their gains shortly.
Around 5:18 am ET, U.K.’s benchmark FTSE 100 index was trading at 5,264.03 – down 6.99 points or 0.13%.
At 4:30 am ET Wednesday, the pound climbed to a fresh multi-month high of 1.5281 against the dollar. On the upside, 1.551 is seen as the next target level for the pound. The pound-dollar pair that closed yesterday’s trading at 1.5179 is currently worth 1.5260.
The currencies of U.S., Japan and Switzerland plunged heavily today as investors borrow money from these countries, where interest rates are low to invest in higher-yielding assets.
The pound jumped to a new multi-week high of 135.86 against the yen by about 4:30 am ET Wednesday. The pound-yen pair is presently worth 135.60, compared to 134.64 hit late New York Tuesday. If the pound gains further, it may likely target the 136.5 level.
The Bank of Japan began its two-day monetary policy meeting today and will announce its decision on rates tomorrow. The bank is widely expected to keep rates on hold at the record low of 0.10 percent.
The pound strengthened against the euro in early European deals on Wednesday. As of now, the pound is worth 0.8334 per euro and the next upside target level is seen at 0.832. The euro-pound pair closed yesterday’s trading at 0.8388.
The Euro-zone CPI for June and the industrial production for May, which were released today likely influenced the euro.
The pound that closed yesterday’s trading at 1.6007 against the Swiss franc soared to an 8-day high of 1.6170 at 4:30 am ET Tuesday. Currently, the pound-franc pair is worth 1.6153 with 1.630 seen as the next upside target level.
Traders will now focus on the North American session, in which the U.S. import and export price indexes, advance retail sales – all for the month of June and the business inventories data for May are slated for release.
At 2:00 pm ET, the Federal Reserve is scheduled to release the minutes of its June 22nd-23rd Federal Open Market Committee meeting.
