Sterling surpassed expectations on Monday to reach a six month high of $1.59 against the dollar in London.
A rise of 2.36 cents was spurred by investors betting that growth in the UK would outpace that in the US, which some economists fear is only months from slipping back into recession.
This morning sterling is further up against the dollar trading at $1.5925 and edging ever closer to the €1.21 against the euro.
There seems to have been a genuine shift in risk appetite in the market as the euro/dollar rate hit a high of $1.3179 yesterday, showing that concerns over the euro sovereign debt crisis may have been papered over recently. We expect to see a pullback between this pairing as cracks will inevitably start to re-appear in Europe’s finances.
