The British pound grew strong amid the European debt crisis and the downfall of the stock markets and commodities, falling against only two out of sixteen most-traded currencies today.
The pound has reached the highest level against the euro in almost two weeks today and also rose from for a second day against the US dollar. The British currency also recovered from the all-time low versus the Japanese yen. The GBP declined against the Norwegian krone and the Swedish krona today.
The pound continues to benefit from the financial uncertainty raging through the Eurozone. It’s currently providing the highest interest rates among the safest currencies and still can boast a high level of liquidity unlike the Scandinavian currencies. At the same time, pound is safely away from the Greek defaults and the Italian downgrades.
The high inflation in the United Kingdom guarantees the comparably high yields on the government bonds. The attractiveness of the pound grows even more as the global investors are seeking an alternative to euro as the alternative to the US dollar (which may sound confusing, but is completely reasonable if you mind the foreign exchange reserves diversification).
GBP/USD rose from 1.5473 to 1.5534 as of 19:14 GMT today. EUR/GBP fell from 0.8725 to 0.8680, while the GBP/JPY currency pair is now trading at 118.79 after closing at 117.03 yesterday.