Increased risk aversion strengthened the US dollar against most major currencies on Friday, as unsteady equity markets and a bleak global economic outlook resulted in investors fleeing to the safe haven of the greenback. However, the dollar failed to capitalise on this when it came to the pound, as the release of a larger than expected rise in British retail sales offered sterling some support. The surprisingly positive data boosted confidence that UK consumers are more resilient than previously thought, although the pound’s gains were limited amid ongoing concern about rising unemployment and a deepening recession in the UK.
Sterling has gained further ground against the US dollar this morning, as share prices rose after a Wall Street Journal report suggested Citigroup was in talks that could see the US government hold as much as 40 percent of the bank’s common stock. The dollar weakened and higher yielding currencies strengthened as risk appetite rose following the report, because it is viewed as a step that would help remove some uncertainty surrounding the lender for now.
In the US today Dennis Lockhart, President of the Federal Reserve Bank of Atlanta, will be giving a speech on the US economy at 17.40 GMT. There are no significant announcements taking place in the UK today.
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