The pound firmed against its major counterparts in the European session on Monday, as Bank of England policymaker Ben Broadbent remarked that the U.K. is likely to see very rapid growth at least over the next couple of quarters.
In an interview with the Telegraph over the weekend, Broadbent said that the U.K. economy will be supported by consumer spending after the pandemic, although a “roaring twenties” style recovery cannot be assured.
There has been “less of a disinflationary effect” as households would spend more after lockdown.
“The price rises for those hitting capacity limits are going to be bigger than the falls in prices for those seeing falls in demand”, he said.
“The burden of proof it seems to me should be as to why that wouldn’t happen, rather than why it would, so I have tended to be on that more optimistic side,” Broadbent added.
The U.K. vaccination programme has reached another milestone with over half of the population having had at least one injection.
The country is on course to ease lockdown measures and re-open the economy due to the progress in vaccinations.
The pound appreciated to 4-day highs of 1.3930 against the greenback and 150.09 against the yen, off its early lows of 1.3865 and 149.54, respectively. The pound is seen finding resistance around 1.41 against the greenback and 152.00 against the yen.
The pound bounced off to 0.8683 against the euro, from a 2-month low of 0.8720 hit at 7:45 pm ET. If the pound rises further, it may challenge resistance around the 0.84 level.
Survey results from the ifo Institute showed that Germany’s business confidence improved only slightly in April as restrictions related to the coronavirus pandemic and supply bottlenecks weigh on economic activity.
The business confidence index rose less-than-expected to 96.8 in April from 96.6 in the previous month. The score was forecast to rise to 97.8.
The pound approached 1.2736 against the franc, rising from a low of 1.2666 seen at 5:00 pm ET. On the upside, 1.30 is possibly seen as the next resistance level for the pound.
Looking ahead, U.S. durable goods orders for March will be featured in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com