Sterling is holding its gains today after in the previous session it enjoyed its biggest climb against the euro since May this year.
The pound seems to be holding its ground against all of its counterparts except the US dollar. Against the euro, investors continue to pare expectations about the possibility of further monetary easing from the Bank of England. Positive comments from S&P about the health of the UK economy have also helped to keep the UK currency around €1.1450.
The greenback is making up ground today after a Wall Street Journal article stated that the Fed was likely to “gradually” introduce stimulus measures at their next meeting, rather than the $500bn that the market has been pricing in. Many investors are beginning to see this as a turning point for the US currency as the looming second round of quantitative easing has now been priced in and as problems in the eurozone start to gain headlines once again.
In other news, the aussie’s rally has lost steam momentarily after surprisingly tame inflation data led investors to doubt the central bank would raise interest rates next week.
Tom Hampton
Analyst – Caxton FX
