The pound, the best-performing major currency in the past year, strengthened after the Bank of England said further gains are possible as Britain’s economy expands amid falling unemployment.
The dollar strengthened versus the majority of its most-traded peers amid expectations the Federal Reserve will reiterate plans this week to reduce stimulus if economic performance continues to show signs of improvement.
The pound weakened against the euro and gilts fell before Chancellor of the Exchequer George Osborne addresses parliament on the economy amid market turmoil and the worst British riots in 30 years.
The dollar climbed to the highest in almost two months after a private-sector report showed U.S. manufacturing rose last month, adding to signals the world’s biggest economy is improving.
The pound strengthened for a fourth day against the dollar after a government report showed U.K. retail sales rose more in February than economists predicted.
The euro weakened for a second day against the yen after the leaders of Germany and France rejected calls for joint bond issuance to stem the region’s debt crisis amid signs growth is slowing.
"With long-U.S. dollar a high consensus and heavily positioned view coming into the New Year, and with market participants seemingly inclined to pare back exposures this week, risks for the U.S. dollar are probably skewed to the downside heading into the release."
- Steven Saywell on Jan 07, 2015
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