Sterling rises on hopes U.S. taper put off to 2014
LONDON Dec 9 (Reuters) - Sterling rose against the dollar on Monday as investors bet that positive U.S. jobs data would not be enough to persuade the Federal Reserve to start cutting back its huge bond-buying programme this month.
Extending Friday's gains, which were helped by strong house price data, the pound rose 0.2 percent to $1.6382, edging back towards the $1.6443 it hit last week - its highest since August 2011.
Sterling has rallied strongly since the summer as better-than-expected UK economic data has added weight to the view that interest rates may rise earlier than previously expected.
Better-than-forecast U.S. jobs numbers on Friday were not enough to convince markets that the Fed would begin tapering its $85 billion-a-month of monetary stimulus before March, pushing U.S. debt yields lower and dragging the dollar down.
"Payrolls were positive for risk, but not strong enough for a taper as early as December," said Nawaz Ali, UK market analyst at Western Union. "The dollar has come under pressure, which is good for the euro and sterling.
"The question is, how far do we want to take cable before the year-end? With tapering put off ... we've still got a few months of party time."
Cable is the exchange rate between sterling and the dollar.
The euro was 0.2 percent lower against the pound at 83.74 pence.
Trading volumes of sterling-dollar and euro-sterling were both well below average levels over the past month.
Sterling also received a boost on Friday from news that house prices rose at their fastest pace in more than six years in November.
Nevertheless, the pound faces testing data next week in the form of inflation and unemployment numbers and minutes from the Bank of England's Monetary Policy Committee, said Western Union's Ali. He said sterling could rise to $1.65 or $1.655 by the end of the year.
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