Strong equities pushed the pound higher vs the dollar

Sterling achieved a new two-week high against the dollar yesterday, supported by a continuation of bullish equities, eventually closing up at $1.6546.

• After an unsteady start, sterling managed to gain further substantial ground against the US dollar yesterday after rating’s agency Moody’s said Britain’s triple-A sovereign debt rating was “resilient,” adding further weight to the economic recovery.
  
• Early trading was relatively modest however with UK trade data, that showed the country’s trade deficit narrowed slightly in July, having little impact on the market.
  
• However, in the afternoon, risk sentiment was buoyed considerably as the FTSE100 reached 5000 points for the first time since October last year, with the pound briefly climbing to 1.6589.
  
• Additionally, analysts have noted that the high price of gold has encouraged investors to move into metals to hedge against declines in currencies, which has put broad selling pressure on the dollar.
  
• In trading this morning, the greenback has capped its losses, regaining around 0.2% in value, despite yet another strong opening in European stock markets.