by Peter Lavelle
UK sterling has continued its rise versus the euro today, strengthening +0.71% to hit 1.3462, its highest in a full 7 years, or since January 25th 2007.
The pound has risen against the common currency for a number of reasons, chiefly because of extreme left party Syriza's victory in Greece's general elections this Sunday. This boosted sterling, because it raises the odds that Greece will exit the Eurozone in the near future. Moreover, the pound is also up, as UK retail sales rose more than forecast in December, while Bank of England executive Kirstin Forbes in a suggested this weekend that the UK's central bank may lift interest rates sooner than forecast.
Pound benefits, as extremists Syriza win Greece's election
Sterling has gained, firstly because left-wing extremists Syriza convincingly won Greece's general election this Sunday, taking 149 of the 300 available seats. This boosted the pound, because although Syriza has pledged to keep Greece inside the Eurozone, Syriza strongly opposes the program of austerity cuts imposed on Greece by the Troika. Hence, Greece now finds itself on a collision course within European authorities, which may lead to what some call its "accidental exit" from the euro.
Sterling rises, as UK retail sales exceed forecasts, Forbes speaks
Moreover, the pound has also hit this fresh 7-year high versus the euro, as UK retail sales jumped +2.3% in the last 6 months of 2014, the most in 12 years, according to the UK's Office for National Statistics. This lifted sterling, because it tells us that British shoppers are continuing to fuel economic growth.
At the same time, sterling has jumped, because Kristin Forbes, member of the Bank of England's Monetary Policy Committee, has said in an interview that there may be "an earlier increase in [UK] interest rates than currently expected." This raised sterling, because higher interest rates would make investing in the UK more profitable to international investors.
