Sterling firms against dollar and euro

18 Sep, 2004

Sterling steadied against the dollar and the euro on Friday after mixed data signals buffeted the currency this week.
Sterling extended recent losses to seven-month lows against the euro earlier this week, as weak data and policymaker comments encouraged investors to speculate that UK rates could be close to their peak at 4.75 percent.
But data on Thursday showing a surprise jump in retail sales in August allowed sterling to unravel some of those losses, and it maintained those gains on Friday.
"After a volatile week, sterling has ended up going nowhere today," said Adam Cole, senior currency strategist at RBC Financial Markets.
Sterling was steady from the US close at 67.92 pence per euro at 1410 GMT, compared with 10-day highs hit on Thursday of 67.75 pence and with seven-month lows hit on Wednesday of 68.57 pence.
Sterling was at $1.7923, steady from the US close and also from the week's opening levels.
Sterling was at 103.60 on its trade-weighted index, at the upper end of recent ranges after hitting its lowest on the index since February earlier this week.
The index has a euro weighting of 64.82 percent, a dollar weighting of 16.49 percent and a yen one of 7.0 percent.
Investors are looking ahead to the release next Wednesday of the minutes of the Bank of England's September meeting, at which it left rates unchanged, for clues on the direction of UK interest rates.
The RICS housing market survey for September, due on Tuesday, will be watched for signs the once red-hot housing market may be cooling.
"The Bank of England minutes and RICS house price numbers will be the key things for sterling next week," said Cole.
"The market will want to know how seriously the MPC (Monetary Policy Committee) is taking evidence of a house price slowdown."

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