Sterling rallies over 2.5 cents against US dollar

Sterling strengthened considerably against the US dollar yesterday, rising 2.54 cents (1.58%) to finish at $1.6305.

• In early trading yesterday the pound recovered from heavy losses endured over the past few days, after a survey released by RICS showed that UK house prices may be bottoming out.
  
• The news that the Prime Minister was safe in his job for the time being following a meeting with Labour MPs last night also calmed selling pressure on sterling yesterday, adding to its early gains.
  
• Sterling continued its rally yesterday afternoon on the back of US and European stock market rises, buoyed by an announcement by the US Treasury that 10 of the country’s biggest banks could repay a combined $68 billion of taxpayer money received during the height of the credit crunch.
  
• In trading so far today the pound has resumed its rally against the greenback, as improved risk appetite continues.
  
• In the UK, Manufacturing Production figures are out at 09.30 BST, whilst in the US Trade Balance data is out at 13.30 BST.