Sterling gains on UK data, policymaker comment

16 Jan, 2010

Sterling hit its highest in nearly four weeks against the dollar on Wednesday, lifted by comments from a Bank of England policymaker which were seen as hawkish and helped by better-than-expected UK data.
Andrew Sentance, a member of the BoE's Monetary Policy Committee, was quoted in a newspaper as saying the central bank was close to holding back on injecting stimulus into the economy and would gauge the impact of its measures.
The comments were seen as indicating the BoE may pause in its asset purchasing programme next month, particularly as he said inflation had not fallen as sharply as expected last year. "Sterling has had a pretty good run over the last couple of days and it has taken some solace from the Sentance comments," said Jeremy Stretch, currency strategist at Rabobank.
An above-forecast 0.4 percent rise in UK industrial output in November also helped sterling. This followed firm retail sales and trade data on Tuesday and lifted expectations the UK returned to growth in the fourth quarter.
The National Institute of Economic and Social Research forecast the British economy grew by 0.3 percent in the last three months of 2009. The Office for National Statistics is due to release its first reading of fourth-quarter gross domestic product on Jan. 26. Sterling was up 0.6 percent against the dollar at $1.6279, having hit a near one-month high of $1.6295.
This took sterling well above its 200-day moving average against the dollar at around $1.6132 and took it close to its 100-day moving average around $1.6307. The euro fell 0.7 percent to a nine-day low of 89.00 pence. This helped push up sterling's trade-weighted index by 0.4 points to 80.2, its strongest since Jan. 4.

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