Sterling finishes up against the US dollar

The pound strengthened against the US dollar yesterday by 0.29 cents (0.18%), closing the day at $1.5953.

• In early trading yesterday, the pound strengthened against the dollar to a near seven-month high as rising equities in Asia and receding pessimism in the UK increased demand for perceived riskier assets.
  
• Better-than-expected UK mortgage approval and service sector data released yesterday morning further aided sterling’s gains, causing it to break through the psychological $1.60 level as a result.
  
• Sterling’s rally continued yesterday afternoon as investors pared back some of the large bets taken against the currency following the collapse of Lehman Brothers last year.
  
• In addition, stronger-than-forecast US Existing Home Sales data further buoyed investor appetite for riskier assets like the pound. May’s figure of 4.68 million was ahead of the 4.65 million analysts had been expecting, as well as a significant improvement on the 4.57 million recorded in April.
  
• However, in late trading, the pound pared some of the gains it had made over the day as traders booked profits. It finished up on the day nevertheless.
  
• In trading so far today, sterling has weakened against the dollar as investors take stock of the past week’s gains.
  
• In the UK, CBI Realised Sales figures are out at 11.00 BST, whilst in the US, Core Durable Goods Orders (MoM) and Unemployment Claims data are both out at 13.30 BST. At 15.00 BST, US New Home Sales figures are due to be released.