Currency Exchange UK

 

Weaker Dollar gives Sterling a boost

Weaker Dollar gives Sterling a boost

The broadly weaker US dollar at the start of this week is providing strength for the pound – it gained by 0.4 per cent to $1.5540 in this morning’s early trade.

Higher-yielding currencies such as the Australian dollar gained interest from investors leading to US dollar selling.  The Reserve Bank of Australia commented that policymakers would need to contain inflation ‘generated by a mining boom’ – a statement which led to the currency’s rise.

The pound’s morning rally was purely ‘a dollar move’ and nothing more, say currency analysts.  Towards the end of last week, sterling had hit a nine-month low against the US dollar after weak retail sales figures were announced.

Generally, investor sentiment towards the UK economy remains cautious, due to weak data and the uncertainty surrounding the run-up to the general election in May.

Recently, a poll showed that the Tory party, which had been showing a clear lead over the ruling Labour party, was now not so far ahead.  No overall majority from either party leads to further uncertainty.

On Friday, there is expected to be an announcement showing revised GDP growth for the fourth quarter – while it is likely to be up to around 0.2 per cent, this is nevertheless a very small revision.

Against the euro, sterling was down this morning to 88 pence.