Pound remains on a high

News from the Office for National Statistics (ONS) that the UK economy expanded at an 0.8% rate in the third quarter of this year, in line with analysts’ expectations helped the pound remain at the top end of its 2013 trading range.

It opens this morning at 3 year highs against the Australian and Canadian dollars and the Thai Baht and at a 10 month high against the US dollar. It is also within touching distance of its 2013 high against the euro.

Dr. Howard Archer, Chief UK + European Economist at IHS Global Insight commented that “the most welcome development being a marked pick-up in business investment which had so far failed to come to the UK recovery party. However, it remains hard to see net trade making much of a contribution to UK growth in 2014."

Whilst the euro continues to struggle against the pound, it reached a one-month high against the dollar as investors on risk appetite and better data from Germany, the biggest euro zone economy.

Yesterday, the main stock exchange index in Japan reached a 6 year high and the Hong Kong index a 3 year high.

Meanwhile, German consumer sentiment hit a 6 year high with income expectations at over a 12-year high and willingness-to-buy figures reached a seven year-high.

GfK, the research company stated that “The apparent trend towards recovery of the German economy has not gone unnoticed among consumers. Both economic and income expectations rose sharply upwards. Willingness to buy also improved again from its already extremely high level, partly stimulated by the European Central Bank lowering interest rates, to reach a seven-year high”.

In addition, German Chancellor Angela Merkel’s conservative alliance on Wednesday struck a deal to form a coalition government with its arch-rival, the centre-left SPD, after weeks of negotiations. But the agreement, which Ms Merkel and her partners should announce later on today is still subject to ratification from party members.