Sterling falls after volatile trading and the BOE's QE programme

The British Pound fell on Friday, hitting a one-week low against the dollar in volatile trade due to a broad rise in the U.S. currency following a stronger-than expected reading of U.S. nonfarm payrolls. The UK currency struggled a day after the Bank of England surprised markets by extending quantitative easing measures to boost the nation's economy, while poor first quarter earnings results at Royal Bank of Scotland also stung the pound. "Sterling/dollar below $1.66 would offer a reasonably good buying opportunity in the mid-term," said Paul Robinson, chief sterling strategist at Barclays Capital in London. The GBP/USD is currently trading at $1.6630 as of 8:35am, London Time.

The JPY rose against the euro after government reports showed Japan’s recession may be abating, encouraging foreign investors to buy assets in the world’s second-biggest economy. The Japanese currency ended two days of losses versus the greenback after machine orders rose, exports improved and as speculation intensified that exporters brought back overseas earnings. The pound traded near a five-week high against the euro before a U.K. report tomorrow that economists said will show the housing market improved for a fifth month. “Japan’s economic data were good,” said Toshihiko Sakai, head of trading for foreign exchange and financial products at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “Foreigners have been net buyers of local stocks, possibly reflecting more interest in Japanese assets. This is a yen-buying factor.” The USD/JPY is currently trading at 97.40 as of 9:01am, London Time.

The dollar retained most of its gains against a basket of currencies on Monday but lost ground to the yen as Japanese exporters and short-term speculators took advantage of its jump the previous session on U.S. jobs data. "The market seems to have focused on the U.S. economic fundamentals themselves in the wake of better-than-expected jobs data, which is lagged data," said a trader at a Japanese trust bank."But it remains to be seen whether this dollar buying will last. I think that the dollar will again stay under selling pressure as more debt issuance is coming this year," he said.

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