ExchangeRates.org.uk - The British Pound held steady against the Euro and US Dollar in early Europe on Friday with the currency underpinned by positive UK data. The Pound to Euro exchange rate (GBP/EUR) was camped just below the key 1.1765 resistance area and traded just above 1.1755 while the Pound to Dollar exchange rate (GBP/USD) held above the 1.2700 level.
The data is likely to boost confidence in firm GDP growth for the second quarter which will support sentiment. The Bank of England is also likely to be wary over pricing trends which will trigger fresh doubts over the potential for near-term cuts in interest rates.
The latest Lloyds (LON:LLOY) Bank Business Barometer jumped to 50% for May from 42% the previous month and the strongest reading since November 2015. Companies were more optimistic over their own trading prospects as well as the wider economy. The index on staffing levels also increased to the highest level since March 2017 while there was little net change in expectations surrounding wage increases.
There was further upward pressure on prices as companies attempted to boost profit margins and the overall prices index hit a 6-month high. According to Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking; “These results highlight a notable improvement in business confidence. Optimism about the economy increased to 46% this month – the highest result since September 2021, when the country was emerging from the Covid-19 pandemic, but before the energy crisis after the invasion of Ukraine.”
Paul Gordon Managing Director for Relationship Management, Lloyds Bank Business & Commercial added; “The last three months saw confidence unchanged at 42% as businesses adjusted to the economic environment. That consistency has been followed up by a marked increase in confidence in May with improved scores for trading prospects, economic outlook and hiring intentions.”
The Bank of England is likely to be uneasy over the pricing and wages data. As far as the housing market is concerned, Nationwide reported an increase in house prices of 0.4% for May, reversing the decline seen in April and compared with consensus forecasts of 0.1%.
There was a 1.3% annual increase in prices after a 0.6% gain previously. Robert Gardner, Nationwide's Chief Economist, commented; “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”
This content was originally published on ExchangeRates.org.uk
