Sterling closed up against the dollar yesterday, but slipped back nearly a cent from its intra-day high after a survey showed that consumer confidence in the US disappointed market expectations.
- In early trading, the markets continued to take the pound higher with analysts noting that long term investors and Asian reserve managers were attracted by sterling’s one-week low.
- This trend was maintained as the UK CBI retail sales index advanced to a balance of +8 in October from a balance of +3 in September, the largest advance since June 2007, beating forecasts.
- There was also support for the UK currency as the oil giant BP reported third-quarter profits of $4.98bn (£3bn), which experts said “obliterated” market predictions.
- However, the dollar trimmed its losses in the afternoon after a survey revealed that US consumer confidence dropped in October. The index produced a figure of 47.7, substantially less than the 53.7 forecast, which cautioned traders against risky investments.
- The weak report bodes ill for the US economy indicating restrained consumer spending, and suggests that the recovery is not as entrenched as initially thought.