Pound slid back against the euro yesterday, but has rebounded strongly in trading today

Sterling dipped slightly against the single currency, relinquishing gains in the afternoon as US equities slipped back, closing the day down just 0.1% at 1.0958.

  • In early trading, investors picked up on comments from the ECB President who added to remarks from other eurozone officials expressing worries about the strength of the single currency.
  • In response the markets took the euro slightly lower, enabling the pound to reach up over 1.10, near Monday’s 3-week high.
  • In addition, the pound gained slight support after the UK public spending deficit in September fell short of market expectations, buoying investor sentiment.
  • However, the euro trimmed its losses in the afternoon as global equities turned negative and investors cautioned over taking long positions ahead of a speech by Bank of England Governor Mervyn King in the evening.
  • In trading today, the pound has broadly strenghtned as the MPC minutes from their latest meeting sounded a relatively positive tone. Currently the UK currency is trading one percent up on the single currency, approaching €1.11.