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The pound rises in price against the dollar and the euro. Analysts believe sterling will strengthen to $ 1.40 this week

The British pound gained on Monday and reached its highest level in the last two weeks against the broadly weakening dollar – by 0.57% to the highest level of the last two weeks – $ 1.3907. And the US dollar today, on the contrary, demonstrates a noticeable weakness against major world currencies, trading near the lowest levels for the month. The reason for the sell-off of the greenback was the lack of growth in the yields of US bonds, which are hovering near their lowest level for the first time in five weeks.

As for the single European currency, the pound in pairing with it at the time of this review has risen in price by 0.14%, to the level of 1.1559.

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The jump in the value of the pound occurred on the eve of a week of publication of a large volume of economic data. Analysts expect the data to show a strong recovery in the UK economy, which reached its deepest recession in 300 years during the pandemic.

Market participants will pay close attention to PMI research in the UK, as well as data on the labor market, inflation and retail sales. According to Chris Turner, head of global markets at ING, the British currency continues to find support in the downturns, and investors maintain their positions amid expectations of a resumption of economic activity in the UK in the second quarter.

With retail stores, hairdressers, gyms and pubs opening in the United Kingdom last week, a faster recovery in the UK than in the EU is an increasingly likely scenario. This is also confirmed by the released April data on house prices Rightmove, which show very encouraging indicators. For example, advertised home prices in the UK rose to record highs. The market was boosted by Finance Minister Rishi Sunak, who extended tax cuts for home buyers last month and announced a new mortgage guarantee program for buyers who cannot afford large deposits. As a result, asking house prices rose 2.1% in the five weeks to April 10. It is noteworthy that for just the second time in the past five years, property prices jumped by more than 2% month-on-month. As a result, the average price of real estate entering the market reached a record high – 327,797 pounds. Plus, homes in the UK began to sell in record time.

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Analysts of the Dutch financial conglomerate ING and one of the largest financial institutions UniCredit expressed confidence in the further strengthening of the British currency in the light of such news and predicted that it could well strengthen to $ 1.40 this week.

It should be admitted that sterling generally felt very confident in the first quarter, and this was largely due to the active implementation of the coronavirus vaccination campaign throughout the UK. Lower expectations of negative interest rates also played into the hands of the British pound.

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