British Pound suddenly jumps against Euro and Dollar in surprise revival

FXOpen

Anyone who has walked the streets of rural England over the past two years would be led to believe that there is no end to the continual economic doom and gloom.

Very concerned residents, combined with news headlines focusing on recessions, cost of living crises, virulent inflation and a noticeable downturn in standards of living would have likely been very visible.

Certainly these are not sentiments without basis. Despite the British calmness, there has definitely been cause for grave concern for many residents of the provincial areas of the country for at least two years now.

London continues to prosper, due to its status as an international capital, unaffected by national ups and downs, as well as being the world's largest and most developed financial center, hence there have been some very stable stock market trends in the capital despite the backdrop of austerity in the wider United Kingdom.

The decline of the British Pound over the latter period of last year against the US Dollar and Euro was a very concerning dynamic. It clearly demonstrated the woes of Brexit, as well as the clear reality that even a wounded US economy was able to get back on track quicker than the blighted British economy.

Inflation in the United Kingdom remains at around 10.5%, against 6.5% in the United States, and whilst the North American corporations have had their revenues affected by the decrease in inflation in their own domestic market which has meant that they have to pay more to support their European subsidiaries in areas of high inflation, as well as pay suppliers more as the US inflation decreases and European inflation continues to rise, domestic business is doing quite well in various states.

The US Dollar has been holding its own, and has been very strong against the Pound and Euro for many months.

However suddenly the British Pound has arisen from its downward spiral and by yesterday evening, a sudden spike was evident.

At 16.00 during the London trading session, the British Pound had risen from the low 1.21 mark earlier in the day to almost 1.22.

That may seem only a small movement on the face of it, but it is actually the highest point in five days by far, half a percent above the five day moving average.

The same applies to the Pound's movement against the Euro. Early this morning it suddenly gained ground and reached 1.137, another five day high against a major currency.

The sudden upward surge that the Pound has experienced has now leveled off, but it has not dropped in value to the lows of earlier this week.

One possible explanation for this could be that figures released by the British government yesterday showing stronger customer demand contributed to renewed increases in backlogs of work and employment across the private sector economy during February, therefore alluding to a possible increase in growth for the British economy which has languished for so long.

The Pound's journey has been interesting over recent months, now the conundrum of whether the British economy is getting itself back on track or not is another item to watch.

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