Sterling continues its rally vs. USD

Sterling continued its recent rally against the US dollar yesterday, rising by 0.51 cents (0.31%) to finish the day at $1.6356.

• In early trading yesterday the dollar fell against sterling, as global stock prices were lifted by improved risk appetite in the global economy. The greenback struggled as the market reassessed the chances of a US interest rate rise at the end of this year, following positive jobs data released last Friday.
  
• Sterling ’s rally was also helped by surprisingly positive UK manufacturing figures, which revealed a 0.2% growth in the sector last month. Industrial production rose 0.3% over the same period.
  
• However, a fall in the US Trade Balance to -$29.2 billion capped sterling’s gains to some extent as investors questioned the health of the world’s largest economy.
  
• However, the news that Russia’s central bank wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead maintained the general downward pressure on the dollar mid-afternoon. It is currently the fifth largest holder of US government debt, with roughly $404.2 billion foreign exchange reserves in Treasuries.
  
• In trading so far today, the pound has continued its rise against the greenback as improved risk appetite sweeps the market.
  
• There are no major announcements due in the UK today, whilst in the US Retail Sales data is due at 13.30 BST.