Having traded in the red during the morning session, the pound rebounded back over $1.64, climbing for the fifth consecutive day and reaching a near one-month high of $1.6422.
- The pound initially fell against the dollar, relinquishing last week’s gains after the Sunday Times said Bank of England policy maker Adam Posen may support an extension of the central bank’s asset-purchase programme.
- Posen added that he was “not worried about overshooting inflation right now,” which many analysts have said will become an issue as the economy begins to grow.
- Last week, following the words of Mr Fisher, the market moved to discount a scenario where it was more likely that asset purchases would be paused. However, these comments suggest that the question of QE is still a finely balanced decision.
- Sterling was able to reverse its losses in the afternoon, however, after the US markets opened strongly, with Dow Jones edging over 10,000, supporting risk appetite in the market.
- The dollar has advanced in trading this morning with markets awaiting Producer Price Index data from the US, released today at 13:30BST.