Sterling rises versus dollar

Sterling rose against the dollar on Monday, clawing back after sliding to a three-week low earlier and tracking the euro's rise against the dollar as risk appetite improved. A fall in UK house prices, however, put sterling under some selling pressure against the euro.
Risk sentiment turned higher, boosting the euro and the pound against the dollar, after the European Central Bank said it bought minimal government bonds from the eurozone last week, placating concerns about economic weakness in some parts of the region. A recovery in European and US stock prices from earlier losses also helped boost the euro and the pound, which are perceived to be higher-risk currencies. "Once the ECB released the bond purchase figures, it helped to stabilise things a bit," said Geoffrey Yu, currency strategist at UBS.
By 1520 GMT, sterling was up 0.4 percent at $1.5665, after hitting the day's high of $1.5692. It pulled back from a three-week low of $1.5535 hit in early Asian trade. The euro was 0.4 percent higher against sterling at 81.95 pence. The euro drew strength from its rally against the dollar, while the pound was knocked by data from a UK property website showing asking prices for UK homes fell 1.7 percent in August.
From a technical perspective, the pound is seen supported versus the dollar so long as it remains above its 200-day moving average at $1.5504. Technical analysts said a break below that marker could open the door to further losses towards $1.5320, the 38.2 percent retracement of its recovery from a May low around $1.4230 to recent highs just shy of $1.6000.
The pound fell 2.5 percent against the dollar last week after the Bank of England cut its growth forecasts and predicted inflation would stay below target over the medium term. But it ended the week higher versus the euro, which fell 1.6 percent. The latest IMM positioning data showed speculators were net long on sterling in the week ended August 10 for the first time since mid-2008. Speculators shifted their bets in favour of a rise in the pound, after extreme short positions had pummelled the pound earlier this year.