Sterling capped its five-day upward trend against the dollar, falling back from a one-month high of $1.6487 as weak economic data supported the haven currency.
- In early trading, sterling held steady against the dollar after UK public finances showed a weak figure but better than market expectations, which offset the negative impact of news that Qatar are selling a significant stake in Barclays bank.
- Data showed a deficit reading of £14.8 billion bringing Britain’s public spending to its worst six months on record, however, the data was better than forecasts, which analysts said boosted sterling’s gains.
- In addition, the US dollar came under pressure as risk appetite continued to rise following encouraging quarterly earnings from US corporations, such as Apple and Caterpillar.
- The US currency found some support in the afternoon though after data revealed weaker than expected US PPI and housing starts figures, which were able to induce some haven demand for the broadly weak dollar.
- In trading this morning, the pound has resumed its upward trend against the greenback, currently up over a percent as the UK MPC minutes confirmed that the decsion not to extend QE was unanimous.