May 31, 2018 / 8:54 AM / 3 months ago

Sterling edges higher on dollar weakness

LONDON (Reuters) - Sterling rose above $1.33 on Thursday as the dollar fell across the board, with traders identifying little in the way of UK-specific drivers as worries about an Italian political crisis and new U.S. trade tariffs dominated market trading.

FILE PHOTO - An English ten Pound note is seen in an illustration taken March 16, 2016. REUTERS/Phil Noble/Illustration/File Photo

The pound traded up 0.4 percent at $1.3334, moving away from six-month lows of $1.3205 hit on Tuesday. It later gave up some of those gains to trade flat at $1.3288 by 1510 GMT.

Analysts said the pound was taking its cue from elsewhere until business surveys for May - beginning on Friday with manufacturing - are published and should give investors a sense of how the UK economy is faring in the second quarter after a shaky start to 2018.

Official data published on Thursday showing a rebound in consumer credit in April failed to move the pound.

“The dollar is under pressure today. It’s helping other currencies. What’s happening outside of the UK is much more important,” said Manuel Oliveri, FX strategist at Credit Agricole.

A more than month-long rally by the dollar stalled on Thursday, when the euro rebounded as two anti-establishment parties in Italy made last-ditch efforts to form a government and avert snap elections.

The dollar did claw back some of its losses on Thursday after President Donald Trump’s administration announced plans to impose tariffs on EU steel and aluminium imports from several countries, raising the risk of a trade war and encouraging investors to seek safety in U.S.-denominated assets.

Sterling has been hit particularly hard in the dollar’s rally since mid-April, which coincided with signs of weakness in the UK economy and a sharp pullback in market forecasts for a Bank of England interest rate rise.

Economists at Barclays said despite improved consumer lending data for April “the underlying trend in recent months has also been steadily weakening in line with the slower growth in consumer spending.”

Against the euro, the pound rose 0.1 percent on Thursday to 87.71 pence per euro. The two currencies have traded in a narrow band in recent weeks as both have come under selling pressure.

Oliveri at Credit Agricole said uncertainty about the state of divorce negotiations between Britain and the European Union continued to weigh on the pound. Credit Agricole expects an August rate hike from the BoE but that remains dependent on data.

Reporting by Tommy Wilkes; Editing by Robin Pomeroy

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below