Sterling climbed against the euro and dollar on Friday after some investors bet that higher-than-expected UK producer prices could force the Bank of England to raise interest rates sooner than expected. Traders also said sterling was supported ahead of commodity trader Glencore's mega $11 billion IPO, which will be listed in London and Hong Kong.
"There's been a lot of talk of a particular IPO that's got a UK listing, and because of that there's been a fair demand for pounds," said Gavin Friend, currency analyst at nabCapital. Sterling was up 0.3 percent at $1.6440, having hit a session high of $1.6464 after US jobs data. The US non-farm payrolls data for April beat expectations, giving a fillip to riskier currencies and assets. Near-term resistance was at $1.6544, the high struck on May 5.
Earlier, sterling staged a recovery from a session low of around $1.6355 after the UK producer price (PPI) data was released. The PPI was higher than forecast, dropping only to 5.3 percent in April from 5.6 percent in March, and raising the risk that consumer prices will not fall as quickly as policymakers hope.
"The PPI data did come in higher than expected, but the main issue is (Bank of England) Governor Mervyn King is still concerned about growth and this means both CPI and PPI will remain elevated," said Alejandro Zambrano, currency analyst at FXCM. The selloff in the euro saw it fall to a 10-day low against sterling. The euro was last 0.4 percent down against sterling at 88.33 pence, retreating from a 13-month high of 90.43 pence struck on Thursday.
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