Sterling rose against other major currencies on Tuesday, hitting its highest levels this year against the dollar, as pessimism about Britain's economy and financial sector eased. A rise in UK share prices buoyed the pound, with sterling climbing as high as $1.5515, touching its strongest level since mid-December.
Trade-weighted sterling also hit a year high of 80.3. "Sterling has a strong correlation with equities, particularly the financial sector," said Russell Bloom, currency analyst at Action Economics in London. UK Financial Investments (UKFI), which manages Britain's stakes in Royal Bank of Scotland and Lloyds Banking Group, has sounded out investors who may be interested in buying some of its holdings, the source said on Monday.
Earlier, the pound's rise was accelerated by stops triggered around the $1.5380 level - roughly the previous high for 2009 - and above, with specific buying in sterling against the dollar by a German name, while others cited UK participants, traders said.Many market players were buying into the bullish trend.
Technical analysts said the 200-day moving average was now coming into view at $1.5568, with support now around $1.5260. Japanese names buying sterling against the yen helped to push the pair to 149.63 yen, its highest in around a week. The pound dipped immediately after the data, then resumed its uptrend to hit the session's high so far. The euro was down 0.5 percent at 87.89 pence after hitting a week low of 87.81 pence.