Sterling is making strong headway against a weakened dollar, advancing towards 1.62

Sterling made strong gains in early trading yesterday following better-than-expected employment data, but the price pulled back to close up 0.4% at $1.5980.

  • The number of UK jobless claiming unemployment benefit rose by 20.8K in September, less than the forecast figure of 25.1K, and the smallest rise since May 2008, enabling the pound to post an intra-week high of $1.6022.
  • The greenback also suffered from comments made on Tuesday evening from Fed Vice Chairman Donald Kohn, which supported speculation that the dollar downtrend will be broad and continuous for some time to come.
  • However, the dollar trimmed its losses in the afternoon following a drop in sales figures. Due largely to the end of the cash-for-clunkers programme, retail figures in the US fell by 1.5% in August, having risen by a revised 2.2% in August.
  • The dollar has come under heavy pressure in trading this morning after the Federal Open Market Committee minutes, released late last night, confirmed speculation that US interest rates would be kept at near zero for an extended period.
  • Sterling has gained over a cent, or 0.8%, so far today, with the price currently hovering just above 1.61.