The Pound exchange rate climbed on Friday after the UK’s growth estimate for the three months through October was upgraded from 0.4% to 0.5%, according to the National Institute of Economic and Social Research (NIESR).
NIESR Head of UK Macroeconomic Forecasting Amit Kara, commented:
‘Although economic growth is likely to be stronger in the second half of this year compared with the first, it is important to note that activity has slowed since last year and this is at a time when growth in other OECD [Organisation of Economic Co-operation and Development] countries has strengthened. Looking ahead, we expect the pattern of demand in the UK economy to rebalance towards international trade in response to strengthening global growth and weaker sterling and away from domestic demand.’
The think tank also forecasts the Bank of England (BoE) will increase interest rates to 2.0% by 2021.
The Pound has made notable gains against a host of currency majors such as the Euro (GBP/EUR) and US Dollar (GBP/USD) and resides significantly higher against currencies such as the South African Rand (GBP/ZAR), Australian Dollar (GBP/AUD) and Swiss Franc (GBP/CHF).
The GBP/EUR and GBP/USD exchange rates are around 0.35% higher, while Sterling’s made gains of 1.07% versus the South African Rand, 0.69% against the Australian Dollar, and 0.55% against the Swiss Franc.
In Brexit news, Michel Barnier has stated that the UK needs to make significant progress before talks can move on to stage two. He stated that both parties needed to agree on an ‘objective interpretation’ of Prime Minister Theresa May’s words on what the UK would honour when it came to financial commitments.
‘This is absolutely vital if we are to achieve sufficient progress in December. It is just a matter of settling accounts as in any seperation. Only sufficient progress – that is to say sincere and real progress – on the three main key issues of these negotiations will enable the triggering of the second phase of our negotiations.’
The Pound to Euro (GBP/EUR) exchange rate is trending in the region of 1.1319.