Pound strengthens on improved risk appetite
Sterling managed to secure further net gains yesterday morning as risk appetite improved and gains in equity markets provided support. UK government borrowing data was higher than expected and UK CBI industrial orders index strengthened in the latest week. There were further inflation pressures with manufacturers expecting to raise prices at a record pace since the surveys started in 1975.
There were also expectations that the combination of higher inflation and fiscal boost (to ease the impact of energy prices) would lead to further interest rate increases by the Bank of England.
The Pound posted notable gains against the Dollar, peaking close to 1.3300 against the Dollar the Euro retreated sharply to near 1.2050.
The deal to drop US tariffs on UK steel and aluminium exports helped underpin Sterling sentiment. The headline UK CPI inflation rate jumped to a 29-year high of 6.2%, above expectations of 5.9% with the core rate at 4.3%. Sterling held around 1.3280 against the dollar with the Euro around 1.2030.