Pound Firmer On Improving Consumer Confidence
THE TAKEAWAY: UK consumer confidence improves in September > Rise in purchasing gauge points to possible pick-up in consuming spending > Pound strengthens
Source: FXCM Strategy Trader
The Pound rose following the release of a consumer confidence survey that pointed to improving household sentiment. Optimism that the data points to a pick-up in consumer spending helped push the UK currency up close to 20 pips as of 23:55 GMT.
According to the GfK report, the overall consumer confidence level rose 1 point to -30 in September. Major contributors to the improvement were household perceptions of the economic situation in the next 12 months – which rose 4 points to -27 – and the gauge measuring climate for major purchases – up 3 points to -28. The indicator for saving intentions dropped 4 points to -14.
GBP has been under pressure not only due to last week’s risk sell-off, but also due to concern that the effects of the coalition government’s deficit-cutting program and persistently high inflation would dampen household spending. Any longer-term strengthening of the Pound will be contingent on further signs of improvement in domestic economic conditions and a shift to a more hawkish stance on the part of the Bank of England.
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