Sterling hits 2009 high

Friday, June 12, 2009

LONDON: Sterling hit a 2009 high against the euro on Thursday after a poll showing rising UK inflation expectations and data pointing to economic growth in April and May bolstered the view that the UK economy may be recovering. Sterling rose to around 85.00 pence against the euro according to Reuters data, its strongest since December. The pair's rally helped the pound to scale the year's high against a basket of currencies at 83.8.

Sterling rose broadly after the Bank of England/GfK NOP Inflation Attitudes Survey showed British inflation expectations for the coming year rose to 2.4 percent in May from 2.1 percent in February, the first rise since August. Thursday's data added to a string of fairly firm UK figures this week, which continue to boost the pound. Analysts added that ongoing speculation that the global economy may be starting to recover was also helping to boost demand for higher-risk currencies, a description often attached to sterling.

"All the local economic news is supportive for sterling," said Adarsh Sinha, forex strategist at Barclays Capital in London. He added: "Sterling has been perceived as a risky currency throughout the financial crisis so the better external markets get, sterling will outperform the dollar and the euro."

By 1345 GMT, the euro traded 0.3 percent lower at 85.15 pence, on track to post its fifth day of losses. The pound's trade-weighted index rose to 83.8, its highest since November 2008. Sterling's gains against the euro contributed to its rise against the currency basket, as a majority of that basket comprises euros.

Sterling traded 0.8 percent higher at $1.6475, near the day's high of $1.6493, and taking gains into a fourth day. The pound was well supported against the dollar after the pair broke through its 14-day moving average earlier in the week. On Thursday, the pair traded comfortably above that support level around $1.6180. The pound hit 161.84 yen to the Japanese currency according to Reuters data, its highest since November.


Courtesy: BRecorder