Sterling slipped to a five-week low against the euro on Monday on speculation euro zone interest rates may rise before those in the UK, but gains were limited as the single currency came under broad selling pressure. The pound edged lower against the dollar on selling interest from Middle East sovereign accounts after the British currency hit a session high but was unable to break above a 13-month peak hit last week.
The euro was supported against sterling, as investors stuck to their view that euro zone rates will soon rise, after European Central Bank President Jean-Claude Trichet reiterated the need to avoid second-round inflation effects.
The euro rose as high as 86.24 pence, its highest since late January. Traders said the latest boost to the euro was driven by corporate demand to buy the single currency versus the pound. Sterling traded 0.2 percent lower at $1.6247, retreating from a session high of $1.6242.
Traders said its inability to extend gains beyond a 13-month high of $1.6344, hit last week, had lured some sterling sellers, including Middle Eastern names, into the market. Some market participants said upcoming gilt redemptions put the pound at some risk of selling as it could spark some repatriation flows away from the UK currency.
Comments
Comments are closed.