Wednesday, 24 June 2009

Sterling edges ahead of US Dollar after choppy day's trading

In a choppy day’s trading yesterday, sterling strengthened by 1.07 cents (0.65%) against the US dollar to finish at $1.6452.
  • In early trading yesterday the pound weakened against the dollar after heavy falls on US and Asian stock markets overnight rocked risk appetite.
  • However, recurring concerns about reserve currency diversification helped the pound yesterday, after ratings agency Moody’s said one threat to the US’s triple-A sovereign credit rating would be if it lost its status as the world’s primary reserve currency.
  • Investors were nevertheless cautious about taking on large positions ahead of the US Fed’s latest interest rate decision due later today, capping sterling’s gains.
  • In addition, sterling also lost momentum against the greenback after US data showed sales of previously owned homes in the country rose at a slower-than-expected pace in May.
  • In trading so far today, the pound has continued its rise against the dollar as investors prepare themselves for a raft of data out today.
  • In the US, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally and most importantly, at 19.15 BST the US Fed gives their latest interest rate announcement and statement. In the UK, CBI Realised Sales are out at 11.00 BST, followed by Inflation Report Hearings at 14.30 BST. Lastly, Bank of England Governor Mervyn King is set to give a speech at 15.45 BST.

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