Sterling up against dollar as risk sentiment revives
The pound rose against a broadly weaker dollar today, rebounding from two-week lows hit last week. UK currency rallied as a revival in moderate risk sentiment put pressure on the greenback. Sterling was however pressured against a firmer euro after data showed a flash reading of the purchasing managers' manufacturing index rose to its highest level since March 2008.
Pound Sterling – UK Markets
Sterling was up 0.7% earlier today to trade against the dollar at USD1.661 as moderate risk-taking sentiment re-emerged. However the pound couldn't falter a steady euro and currently trades at 1.107 against the single currency. The highlight for UK data this week will be Wednesday's second estimate of UK third quarter gross domestic product, which some analysts believe will be revised up slightly from a first estimate reading of a 0.4% decline. Traders will also be keeping a close watch when Bank of England Governor Mervyn King addresses a Treasury committee on its latest inflation report tomorrow.
US Dollar – US Markets
The dollar fell for the first time in three days against the euro on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain low. The greenback currently trades at 1.492 per euro and USD0.604 against the pound. US currency was pressured after St. Louis Federal Reserve President James Bullard said on Sunday the central bank should keep alive its mortgage-related asset purchase programme beyond a planned end-date in March. Bullard will be a voting member of the Fed's rate-settling committee next year.
Euro – European Markets
The euro was up 0.1 percent earlier this morning at 90.12 pence after briefly hitting a one-week high of 90.39 against the pound. The single currency climbed after figures revealed a flash reading of the purchasing managers' manufacturing index rose to its highest level in October since March 2008. The euro is currently trading at 1.492 against the dollar and looks to break higher from a technical standpoint.
Other Currencies - Highlights
The yen weakened as commodities and stocks advanced, boosting demand for higher-yielding assets such as the South African rand. The Japanese currency depreciated to 132.84 versus the euro, from 132.09, and was at 88.77 per dollar, from 88.88. The South African rand was the biggest gainer versus the dollar, strengthening 1.3% to 7.5124.