Sterling strengthens against dollar as investors reverse bets
Sterling strengthened to a three-and-a-half-month high against the US dollar yesterday after investors reversed bets against the pound and an improvement in risk appetite saw the US dollar drop.
Sterling strengthened to a three-and-a-half-month high against the US dollar yesterday after investors reversed bets against the pound and an improvement in risk appetite saw the US dollar drop.
Currency rates - August 18
EURO/GBP - 1.1453
US$/GBP - 1.6503
CHF/GBP - 1.3154
CAN$/GBP - 1.6228
AUS$/GBP - 1.5732
ZAR/GBP - 11.7745
JPY/GBP - 126.52
HKD/GBP - 12.8690
NZD/GBP - 1.9836
SEK/GBP - 10.4904
US$/EURO - 1.4392
Heavy demand from a UK clearing bank related to merger activity also contributed to sterling's rise. The pound reversed earlier losses as the Bank of England's meeting minutes showed that the Monetary Policy Committee were more downbeat than normal. Policymakers Spencer Dale and Martin Weale ended calls for an interest-rate increase this month as the euro-zone crisis and signs of a global economic slowdown threatened to hurt growth in Britain. In addition, unemployment claims increased by 37,100 last month.
In the euro zone, new proposals from the French and German premiers met a cold response and failed to convince investors that the region's debt crisis was closer to being solved. The focus was on long term stability and greater accountability for balancing budgets in the region. Responsibility for warding off fresh market attacks remains with the ECB, which has bought record levels of Italian and Spanish debt recently to keep borrowing costs manageable for the two countries.
In the USA, the US dollar fell against most of its major counterparts as investors sought higher-yielding assets in other currencies. Global stock markets gained yesterday, helped by better than expected financial results from US retailers. A report showed rising wholesale prices that saw investors worry about potential inflation in the country.
Elsewhere, the Canadian dollar strengthened against the US dollar as increased demand for higher-yielding assets boosted U.S. stocks and commodities, benefiting growth-linked currencies. The Swiss franc strengthened after the Swiss central bank stopped short of announcing a target rate or temporary peg to the euro in its third attempt in as many weeks to drive down the currency.
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