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Sterling gains against US dollar after Bank comments

Published:  28 January, 2011

Sterling gained against the US dollar yesterday as the currency continued to gain support following Wednesday's Bank of England minutes, hitting a daily high of $1.5991/£1.

Sterling gained against the US dollar yesterday as the currency continued to gain support following Wednesday's Bank of England minutes, hitting a daily high of $1.5991/£1 - just shy of the $1.60/£1 mark.

Currency Rates
EURO/GBP - 1.1583
US$/GBP - 1.5870
CHF/GBP - 1.5009
CAN$/GBP - 1.5822
AUS$/GBP - 1.6026
ZAR/GBP - 11.2723
JPY/GBP - 131.26
HKD/GBP - 12.3628
NZD/GBP - 2.05513
SEK/GBP - 10.2499
US$/EURO - 1.3690


Sterling's support came from the fact that committee member Martin Weale joined Andrew Sentance in calling for a 0.25% rate hike - a move that was seen as increasing the likelihood of an interest rate rise later this year, despite Tuesday's poor GDP figures. Mervyn King made it clear in a speech on Tuesday night that any rate decision would have the long term prospects of the economy at heart. King's speech reaffirmed his belief that inflation would rise before dropping next year.


In the euro zone, high inflation and potential interest rate hikes seemed all the rage this week - yesterday saw Germany join the party with prices rising in the country at their highest rate since October 2008, up 2% year on year. This prompted further speculation over interest rate hikes with many analysts expecting a 0.5% increase by the end of the year.

In the USA, the US dollar fell yesterday as the impact of President Obama's State of the Union address sank in. The President announced the first moves to start cutting spending and the deficit. On the data front, numbers for first time claimants of unemployment benefits gained that did not help.



Elsewhere, the Japanese yen fell yesterday after credit rating agency Fitch cut the country's credit rating to AA-. The move called into question the yen's status as a safe haven currency and many feel that this could benefit the US dollar in the long run.


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