Sterling inched down versus the dollar on Thursday but stayed within sight of 2014 peaks after hitting its highest in almost two months, helped by a slide in the US currency this week that has surprised many in global markets. A number of major banks had turned against the pound towards the end of last week, convinced that more robust data and the first signs from the US Federal Reserve of higher interest rates next year were set to push up the dollar.
In the event, even after the European Central Bank pointed towards the possibility of money-printing, the mood has turned again and the weakness of the dollar since jobs figures last week has taken sterling back to around $1.68. After hitting a high of $1.6821 in Asian trading, it edged down to $1.6770 in European hours.
"There's a little bit more upside potential there against the dollar, although I wouldn't be calling it as high as $1.70," said Ian Stannard, strategist with Morgan Stanley in London. "The UK's growth picture is still holding up in the near term. Exports are still a bit volatile, but output and the overall outlook is pretty solid." The pound and the euro gained more than half a percent against the crown on Thursday after Sweden's consumer price index fell deep into negative territory, down 0.6 percent year-on-year in March.
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