The pound strengthened over the US dollar by 1.01 cents in yesterday's trading to close at the 1.4061 level. The pound's performance was driven by improved sentiment amongst investors, with risk appetite improving as share prices increased. The FTSE 100 index rose 2.9%, with Barclays shares up 22% on news that it was planning to sell its iShares unit to raise capital. This news was welcomed by investors who speculated that the money generated could pay for Barclays' participation in a UK asset protection scheme. Although the pound reached a high of 1.4229 it did pare some of its gains in late trading as demand for the dollar rose despite it being announced that US industrial production fell 1.4% in February.
Today's trading has remained quiet with the market currently sitting around yesterday's close. This is ahead of the announcement of DCLG House Price Index data in the UK and Building Permits, Housing Starts and Producer Price Index figures in the US. Investors are trading cautiously ahead of the announcement of Bank of England minutes and the Fed's interest rate announcement tomorrow. Whilst the US interest rate target is 0.0% to 0.25% and there is no scope to go lower, comments from the Fed will be eagerly anticipated.
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