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Sterling reaches one-week high vs Dollar

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The Pound edged up against a weaker Dollar and fell against the Euro on Thursday, as investor focus remained on the Bank of England's policy trajectory and the economic outlook.


Sterling rose versus the Dollar a day after data revealed services industry growth in the US slowed further last month, whilst a gauge of prices paid by firms for inputs fell to a four-year low.


The Pound gained 0.05% to $1.265 against the Dollar on Thursday after reaching a new one-week high of $1.2667. However, it declined 0.12% against the Euro, reaching 85.74 pence. 


"Our concerns are the point at which this favourable backdrop of low volatility and strong cross-border flows begins to turn," stated Kamal Sharma, a forex strategist at BofA. 


"At that point, we see genuine risks of a more sizeable retrenchment in GBP."


Furthermore, according to recent data, "the deficit of the balance of payment is consistent with the long-term average, but net portfolio and investment flows are weaker than the long-term average," he added.


Additionally, investors remained concentrated on the Sterling cross against the Swiss Franc following the Swiss National Bank cutting rates last month, Reuters news agency reports.


Indeed, the Pound rose from 1.089 against the Swiss Franc at the beginning of February to 1.1485, the highest since June last year.


"The GBPCHF spot has reached our target and faces a significant technical resistance level of around 1.15," according to Dean Turner, economist at UBS. "This should limit (but not rule out) further upside potential from here."


He also cited the likelihood of Europe or the UK experiencing a more severe or prolonged recession as a potential risk to this forecast. 


On Thursday, economic data revealed that British companies' anticipations regarding selling prices and wage hikes in the upcoming year were moderating in March. However, the UK economy appeared to be on course to emerge from recession.


"Similarly, a blue sky economic scenario with the BoE holding on to high rates for longer could result in a continued rally," Turner added.

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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.