Sterling finishes May on a high

The pound strengthened considerably against the US dollar on Friday, finishing the day up 2.44 cents (1.53%) at $1.6187.

• In early trading on Friday, sterling rose to a near seven-month high against the greenback as signs the global recession may have passed its worst prompted investors to seek riskier assets.
  
• Earlier worries surrounding the US government’s triple-A credit rating also subsided mid-morning on Friday after a series of successful US Treasuries auctions indicated healthy demand for US debt.
  
• Better-than-expected UK housing data released by Nationwide also buoyed appetite for the riskier pound on Friday morning. Its survey showed house prices rose by 1.2% in April.
  
• However, weaker-than-forecast US Preliminary GDP figures released mid-afternoon cooled the pound’s rally to some extent. This month’s reading of -5.7% was worse than the -5.5% analysts had been expecting, although it did represent an improvement on the -6.1% the month before.
  
• Nevertheless, the pound posted a considerable increase against the greenback over the day, capping an impressive 8.5% rise against the US currency in May.
  
• In trading so far today, the pound resumed its rise against the dollar as improved risk sentiment in the market continues.
  
• In the UK, Manufacturing PMI figures are due at 09.30 BST, whilst at 15.00 BST in the US, ISM Manufacturing PMI data is out.