Sterling struck a one-week high against the dollar on Thursday, and pared losses against the euro, after a Swiss National Bank official said the central bank would look to increase its weighting of sterling assets in a year's time. Asked at a conference whether the Swiss central bank (SNB)would increase in relative terms the proportion of sterling assets in its portfolio, Brigitte Bieg said: "I guess it will be increased in a year's time."
Sterling jumped to a one-week high of $1.5716 from around $1.5626 before Bieg's comments, while the euro fell to a session low against the pound. Sterling later slipped back and was last at $1.5680, up 0.7 percent on the day. The euro eased to a session low of 86.25 pence from around 87.75 pence and was last at 87 pence, just below its 200-day moving average of 87.12 pence.
"Those comments from the SNB are one more reason why we think sterling will be underpinned and the euro will underperform," said Jane Foley, senior currency analyst at Rabobank. "We expect the euro to fall to 85 pence." Investors are focused on how the SNB will reallocate the euros it has been mopping up since it announced a minimum exchange rate target of 1.20 francs to the euro earlier this month.
Earlier in the session, the pound fell against the euro, with the single currency buoyed by a resounding vote in the German parliament to ratify the euro zone rescue fund's new powers. On the downside, the pound has support above its recent one-year low of $1.5326.
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