Pound hits 2-month high against euro
Sterling touched a two-month high against the euro this morning and hovered near its highest against the US dollar in more than three months after Bank of England policymaker Andrew Sentence said the UK economy was moving towards recovery.
Pound Sterling – UK Markets
Sterling rose 0.2 % to USD1.685 earlier today and strengthened by the same amount against the euro to 88.84 pence.
Bank of England policymaker Andrew Sentance played down official data showing that the UK economy contracted in the third quarter, saying other major indicators, including a resumption of growth since the first half of this year suggested an imminent recovery.
Traders also speculated that data due later in the day may show that British inflation accelerated more than expected in October.
US Dollar – US Markets
The USD has managed to recover somewhat after being beaten down in Monday's trading but still remains relatively unchanged. The greenback is currently trading at 0.594 against the pound and USD0.668 versus the Euro.
Encouraging comments from Fed Chair Ben Bernanke have resonated with investors and have concurrently helped to prop the dollar in the interim, while interest rate expectations are pared back following more dovish than expected RBA Minutes.
Euro – European Markets
The euro slipped 0.2 percent to 88.69 pence, it's weakest since mid-September. The drop has for now been halted by support on the 200-day average, at 88.66 pence, but the charts suggest a good chance of a fall in the coming days.
The European currency declined against 9 of its 16 most- traded counterparts after Dominique Strauss-Kahn, the managing director of the IMF, spoke in a media briefing in Beijing. Strauss-Kahn said the global recovery is likely to be sluggish, though he doesn't expect a "double dip."
Other Currencies - Highlights
Australia's currency dropped from near the strongest level in 15 months after minutes from the central bank's most recent meeting cast doubt on a third-straight increase in key lending rates.
The Aussie retreated from highs of USD0.940 to USD0.930, after minutes from the Reserve Bank of Australia's last board meeting showed the pace of further tightening was uncertain.
Later today we can expect Swiss retail sales, UK retail price index figures and Eurozone trade balance