29th October 2010
Good morning. Sterling rose one percent against a broadly weaker dollar and outperformed the euro on Thursday as investors looked to push the currency higher in a choppy market, offsetting disappointing UK housing data. Rates at 08:30am are as follows:
Despite poor housing data for the UK, Sterling remains firm following good GDP data earlier in the week. Sterling has benefited since stronger-than-expected third quarter UK gross domestic product data on Tuesday eased concerns about an imminent need for further quantitative easing from the Bank of England.
But analysts said the UK economic outlook remained cloudy, with QE a possibility if the economic situation worsens, although the BoE is expected to leave policy on hold at its meeting next week.
"We have had a very volatile week after the better-than- expected GDP data but there is still an awful lot of concern about the prospects for the UK," said Jane Foley, a senior currency strategist at Rabobank.
Adam Posen, the one BoE policymaker who voted to expand QE this month, warned about economic weakness in a newspaper article, contributing to a gloomier picture after Tuesday's surprise GDP growth.
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