Sterling stronger on data, rates speculation

| August 2, 2006 | 0 Comments

Sterling strengthened on Wednesday as new data on retail and construction gave traders confidence. In addition, some traders bet that the Bank of England will raise interest rates when the Bank’s Monetary Policy Committee meets on Thursday even though most analysts believe there is only about a 15 percent chance that such a rate hike will materialize.

The UK currency added 0.1 percent to $1.8779 in relation to the US dollar, while it gained 0.3 percent to £0.6814 versus the euro and was up 0.4 percent to SFr2.3082 against the Swiss franc.

The US dollar was mixed on the session, with a slight gain against the euro, to $1.2789 and no real movement at all versus the yen to ¥114.51. However, the greenback was 0.3 percent lower in relation to the Canadian dollar to C$1.1263. In addition, the US currency was 0.6 percent lower to R6.883 against the South African rand.

In Australia, the central bank raised interest rates by a quarter of a percentage point to 6 percent, but the Australian dollar still fell 0.3 percent to $0.7636 against the US dollar.

Emerging European currencies were up, with the Hungarian forint up 0.7 percent to Ft272.33 in relation to the euro and the Icelandic krona 0.5 percent higher to IKr71.32 versus the US dollar.

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