Sterling strikes one-month high against the dollar
The pound jumped against the US dollar this morning and extended its gains against the euro to hit a one-month high. The New Zealand dollar also shone following comments from the Reserve Bank chief whilst the Canadian dollar dropped.
Pound Sterling - UK markets
Sterling gathered momentum hitting a one-month high against the dollar this morning after Bank of England policy makers maintained consensus on the size of their bond-purchase plan this month. The pound climbed nearly 0.8% to USD1.651, its highest since mid-September.
According to traders, the pound's drive forward was fuelled by demand from a UK oil company. UK currency extended its gains as market participants covered short positions in the UK currency ahead of Bank of England policy meeting minutes due later today.
US Dollar - US Markets
The dollar fell against the pound, the euro and the New Zealand dollar as signs that companies are shaking off the effects of the recession exhausted demand for the US currency as a safe haven.
The dollar was 1.65 against the pound this morning and traded at 1.494 against the euro. The greenback saw little change versus the yen at 90.74 and sentiment towards US currency remains downbeat on the prospect of US interest rates staying at low levels for longer than most other major countries.
Euro - European Markets
The euro fell 0.6% to 90.57 pence, its weakest level against pound sterling since late September. It traded as high as 1.49 versus the dollar in earlier trade but failed to break above the psychologically important USD1.50 level.
Looking ahead, the release of the IFO institute's business climate index on Friday is expected to show improving business confidence in Germany which will support the EUR.
Other Currencies - Highlights
The Australian dollar rose 0.4% to USD 0.927, while the New Zealand dollar leapt nearly 1% to USD 0.756 following comments from the Reserve Bank chief Alan Bollard stating that “a strong currency was not necessarily an obstacle to raising the cash rate.”
Meanwhile the Canadian dollar fell sharply after the Bank of Canada decided to keep it interest rate at 0.25%. The bank warned that favourable economic developments were being undermined by the Canadian dollar's strength, sending the currency tumbling.
The Swiss franc traded at USD1.014 this morning and the yen continued trading in a range from 90.60 to 90.90 against the dollar during Asian sessions.