Sterling has spent most of the day with minimal gains against the majority of its peers, solidifying gains made on Tuesday. Against the US dollar, GBP is a full percent higher.
Better than expected GDP figures on Tuesday sent the pound skyrocketing to post the biggest daily gains it has seen since May. Since then, we have not seen any great swings. It appears for now like the gains are here to stay as the pound posted a modest gain yesterday and looks like doing the same today. Sterling is currently trading up above the €1.1450 level despite yet more disappointing housing data from Nationwide this morning.
Earlier in the week the US dollar did dust off its armour and join sterling in the battle against the euro. However, the greenback has failed to hold its reclaimed territory and has been driven back. The looming QEII decision next week seems to be too much for the USD to counter. However, it’s looking increasingly unlikely that the euro hoards can keep up their pretence for too much longer as fresh concerns over Greece’s debt issues are starting to show yet again [bond spreads widening]. The question is not necessarily if the dollar will rise again, it is more a question of when?
Tom Hampton
Analyst – Caxton FX
