Sterling hovered near a two-week high against the dollar this morning, boosted by pre-election opinion polls. However, questions hang over the UK’s public finances.
Pound Sterling – UK Markets
The pound hit a two-week high of 1.5270 against the dollar in early trade ahead of the release of Bank of England policy meeting minutes.
Sterling began its rise yesterday when healthy UK housing data and political opinion polls triggered a round of short-covering which helped the pound recover from recent losses to climb more than 1% against the dollar.
Opinion polls showed that Britain's main opposition Conservatives are back on course to win the election, expected to happen in May.
At 0946 GMT the pound traded at 1.5210. It will be interesting to see whether or not UK currency can maintain this strength, as there is still caution in the air concerning the nations public finances and gigantic deficit.
US Dollar – US Markets
The weakness of the greenback is expected to continue today as traders return to the euro and pound whilst selling safe-haven currencies such as the dollar and the yen.
At 0958 GMT the dollar traded at GBP0.6574 and EUR0.7256.
If news about Greece and UK debt concerns make it to headlines, investors could well jump back into the safety of the Dollar.
Euro – European Markets
The euro has been trading higher against the greenback for most of the day, climbing around 80 pips. AT the time of writing the single currency traded at 1.3781 versus the dollar and 0.9060 against sterling. The euro was also up by 100 pips against the yen in early trading, marking the rise of riskier assets due to growth in European consumer sentiment. Both pairs ended yesterday close to the daily high, signaling the rally is expected to continue into today.
Other Currencies – Highlights
Canada is on its way to be the first Group of Seven nation to erase its budget gap after the global financial crisis with its economy expanding at a 5% annualized rate in the fourth quarter.
Canada’s currency reached its strongest level since July 2008 against the USD after crude oil for April delivery climbed 2.4% yesterday, the most since February. The currency has risen 3.9% this year.
Sterling Rises on Hopes of EU Softening Tone on Backstop