The British pound was the only currency to rally against the US dollar today thanks to the fact that the FTSE saw the biggest gain in 14 months. The rally was triggered by strong earnings and rumors that the UK?s seventh-largest bank could receive a buyout offer from the National Bank of Australia.
Merger and acquisition flow has often come to the support of the currency therefore it is not a surprise to see it do so again. Economic data released this morning was mixed. Consumer confidence deteriorated but even though the expectations portion of the CBI Industrial Trades survey dropped for August, the realized component of the report improved modestly. In an environment where the economic outlook for the US is deteriorating quickly, the relative stability of the UK economy and the continual M&A flow will help the British pound outperform the US dollar.