Pound weakens against the US dollar

The pound weakened against the US dollar yesterday, finishing the day at $1.5156.

• In early trading yesterday the pound was buoyed by rallying equities, bringing sterling off a day low of 1.5059.
  
• With no major economic announcements in the UK, investors waited for the announcement of US jobless claims figures in the afternoon. The data showed that during the preceding month 637,000 new Americans applied for unemployment benefit and 6.560 million continued to do so. Both these figures were larger than expected and suggested that the US is suffering more than some expected from recessionary pressures. As such the US dollar’s position was undermined and the pound was able to post further gains.
  
• Producer Price Index data was also released in the US and with volatile food and energy prices removed from the equation they stood 3.4% up on the day and in line with expectations.
  
• With the FTSE closing the day at 4,362.58, up 31.21, the pound continued to strengthen over a broadly weaker dollar as improved sentiment saw investors’ risk appetite improve.
  
• In today’s trading the pound continues to hold its ground as the market awaits the announcement of Consumer Price Index (CPI) data in the US at 13.30 BST. A key indicator for inflation, CPI data measures the changes of prices for a basket of goods in the US economy and investors are currently anticipating a 0.6% contraction on the year. A result significantly different to this will certainly see the pound/dollar rate move sharply.