Sterling rose to a 13-month high versus a broadly weaker dollar on Wednesday as the US unit struggled with expectations that US interest rates would stay than those in the UK and most other G10 economies. The dollar index skidded to its lowest levels since November as markets continued to short the currency after recent comments from Federal Reserve Chairman Ben Bernanke did little to alter the view that US official rates would be on hold at current ultra-low levels for a protracted period.
But the pound lagged the euro as investors positioned for hawkish talk from ECB President Jean-Claude Trichet at his press conference on Thursday after the bank's policy meeting.
The euro traded up around 0.3 percent versus sterling at 85 pence. The shared currency also rose to a year-to-date high versus the dollar. The pound was helped by above-forecast data from the UK construction sector which added to views that the economy is rebounding, following on from a strong manufacturing survey on Tuesday. The headline activity index rose to 56.5 in February from 53.7 in January, confounding analysts' forecasts for a fall to 52.9. Sterling rose above $1.6300 versus the dollar after the data and later triggered stop-losses through $1.6330 en route to $1.6344, its highest since January 2010. It was last at $1.6335, up around 0.5 percent on the day.
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