Sterling extended sharp gains against the dollar, as traders cut short pound positions after many reckoned earlier bets against the currency were overdone.
- Sterling found support following further upbeat comments from a BoE member concerning the quantitative easing programme.
- Sterling reached up to a three-week high against the dollar, peaking just below 1.64 before closing the week at $1.6353.
- Initially sterling trimmed its position after sterling/dollar stop-loss orders were triggered at $1.6300, but some analysts noted that the pound would continue to be supported as investors had taken up fresh long positions in sterling and were willing to hold onto them.
- Sterling also found support from recent M&A talk, with Qatar’s sovereign wealth fund planning a renewed offer for the supermarket chain J Sainsbury.
- Sentiment towards the US currency remained weak as optimism about the global economic outlook, buoyed by a string of strong US corporate results, turned people away from the greenback in favour of perceived riskier currencies.