Sustained selling pressure on the dollar supports demand for the pound

Sterling continued to gain yet further ground against the greenback yesterday, advancing another 0.6% to close the day at $1.6649.

• In morning trading yesterday, European indices fell back to trade in the red, with the FTSE heading back below 5000 points, which unnerved investors and put selling pressure on the pound.
  
• At midday though, the BoE announced that interest rates would remain steady at 0.5% and that the asset-purchasing programme would not be extended, as some had predicted, which enabled the pound to hit its highest point against the dollar since August 10 th, at 1.6684.
  
• The pound was also supported by a rise in risk appetite as US weekly employment change figures continued to improve.
  
• Earlier this morning, a raft of positive data emerged from China, adding to hopes of a global recovery, prompting investors to keep shifting funds into riskier assets, and enabling the pound to extend its monthly high to over $1.67.
  
• Light profit taking however has capped the pound's advances, with the pair currently trading around 1.6700.