Pound Rises Against Euro

The pound sterling rose against the euro for a second week on assumptions that the Bank of England is considering to raise interest rates and the European Central Bank might increase stimulus.

The pound touched the highest level against euro in almost three months as data indicated that in April Britain’s services grew more than expected by analysts. U.K. government bonds dropped as both the National Institute of Economic and Social Research and the Organization for Economic Cooperation and Development raised their forecasts for growth in U.K. On May 14, the Bank of England will present its quarterly Inflation Report.

This week the pound gained 0.7% percent to 81.67 pence per euro after reaching the highest level since Feb. 17 at 81.63.

Higher Rates

Money markets expect that the Bank of England will increase rates of interest within a year to support the pound, which has risen 0.8% in the past month. The euro eased 0.4% amid reports that further ECB stimulus will decrease interest rates.

Quarterly Inflation Report is expected to show U.K. unemployment rate to decline to a five year low at 6.8%.