Sterling rose to a 16-month high against a broadly weaker dollar on Thursday and gained versus the euro after British retail sales rose unexpectedly, but uncertainty remained about economic growth in the UK. Sterling rose over 1 percent on the day versus the dollar but later slipped back a touch after comments from Bank of England policymaker Martin Weale, who has been voting for a rate rise since January.
Weale told Reuters Britain's recovery in the first quarter has been disappointing, as markets began to focus on next week's preliminary growth release. Sterling rose to $1.6600, its highest since December 2009, with thin trade ahead of the Easter break leading to exaggerated moves across currency markets. Weale's comments helped knock it back to $1.6532 in afternoon dealing, up 0.8 percent for the day.
Childe-Freeman said $1.67 would be the next key upside level to breach, with sterling likely to rise higher against the greenback on persistent dollar weakness. Sterling pared earlier losses against the euro which traded down 0.6 percent at 87.90 pence, though analysts said the pound could be set to slip further against the single currency having hit a five-month low last week of 89.24 on diverging interest rate expectations.
The euro has been boosted in recent months as euro one interest rates are widely expected to rise again this year after last month's 25 basis point increase. UK rates remain at record lows of 0.5 percent, with markets pushing back the timing of the first hike to November.
Comments
Comments are closed for this article.