Sterling rose sharply against the dollar on Wednesday, tracking steep gains in riskier assets and currencies after the world's leading central banks acted jointly to inject much-needed liquidity into the global financial system. The US Federal Reserve, the European Central Bank and the central banks of Britain, Canada, Japan and Switzerland agreed to cut the cost of existing dollar swap lines by 50 basis points from next Monday in a bid to help European banks hurt as a result of the eurozone debt crisis.
"Sterling has suddenly developed a much more bullish tone since the announcement of co-ordinated central bank efforts," said Richard Wiltshire, chief FX broker at ETX Capital. The pound last traded up 0.6 percent at $1.5715, edging back below its 55-day moving average at $1.5747. It faced resistance just ahead of $1.5800, with the 21-day moving average at $1.5792 and the November 21 high at $1.5796. The problems facing the UK economy were highlighted in finance minister George Osborne's autumn budget statement on Tuesday, when he unveiled much lower growth forecasts and raised government borrowing targets.
The euro was up 0.2 percent against the pound at 85.55 pence, having earlier fallen as low as 85.205 pence. More falls would target the November 10 low of 84.86 pence, though traders cited corporate bids from 85.00-85.20 pence, which kept it supported.
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