Pound gains more than two cents against the US dollar

The pound strengthened by over two cents against the US dollar on Friday, finishing the day at $1.5231.

• In early trading on Friday the greenback slipped against the pound ahead of US Non-farm Payrolls data for April. Traders expected the US economy to have shed 590k jobs, less than the 663k in March, and therefore some took on more risky positions.
  
• However, trade was relatively quiet following Thursday’s results of US “stress tests”, which did not yield any negative surprises. Sterling remained above the psychologically key $1.50 level as a result.
  
• The news US employers only shed 539k jobs in April further extended sterling’s gains against the US dollar early Friday afternoon.
  
• However, worse-than-expected Month-on-Month and Year-on-Year Average Hourly Earnings figures released in the US capped demand for sterling to some extent.
  
• Elsewhere, strong gains on the FTSE 100 buoyed investor demand for the pound, primarily because the UK economy is so dependent on the financial services sector. At one point the FTSE 100 was up 1.7%, although it eventually finished the day up 1.44%.
  
• Optimistic mood in the financial markets improved risk sentiment on Friday afternoon, causing investors to buy into the perceived riskier pound, selling the safe-haven US dollar.
  
• In early trading today the pound has pared some of Friday’s gains against the US dollar, as investors continue to digest last week’s market-moving events.
  There are no major announcements due in the UK or the US today.