The GBP rose against both the euro (EUR) and U.S. dollar (USD) on Friday afternoon, with analysts suggesting it had something to do with the local election results.
As the currency soared, observers pointed to the big losses expected for the Conservatives and Labour. It comes days after experts warned that the pound risked its global status as a political uncertainty hovered regarding Brexit.
By 3 pm local time in the United Kingdom, the Sterling had rallied to break through the key €1.170 level. The pound had struggled against this barrier, but with sentiment driven by the alleged losses, moved higher to trade at €1.1723.
The currency made similar gains against the U.S. dollar, with the slip up in USD seeing the Sterling rise to trade at $1.3110. The U.K currency had struggled over much of the week as a stronger dollar pegged the rest of the global currencies down.
On Thursday, the Sterling declined following Bank of England (BoE)’s decision to hold interest rates at 0.75 percent, warning that U.K.’s economy would very much depend on Brexit.
As per the BoE, rates will not touch the 1 percent level until at least in the last quarter of 2021.
That drop had come at a time the pound was on a downtrend, but yesterday’s surge could also owe it to recent remarks from the U.K. lender. The BoE said earlier in the week that the economy had received a timely boost after British companies and those in the European Union began building stocks in response to the new Brexit deadline.
At one time, the pound traded in the region of $1.50 against USD, so recent gains are worth taking. According to a recent survey conducted by Reuters, analysts have predicted the pound will rise to trade as high as $1.45 by the time the new Brexit deadline comes around. On the pessimistic side, analysts think it could go down to about $1.23.
Meanwhile, U.K’s gross domestic product (GDP) is expected to grow by as much as as1.5 percent in 2019. The new estimates are revised up from February’s forecast of 1.2 percent.