Sterling rises but sentiment remains downward below $1.50

The British pound rose on Thursday after a slight pickup in inflation expectations, though analysts expected economic and political concerns to keep the pound under pressure ahead of an upcoming general election. The pound fell against the greenback and euro on Wednesday after below forecast manufacturing output figures added to a string of disappointing data. But Britons' expectations for inflation over the next 12 months rose slightly, a survey from the Bank of England showed on Thursday, helping to underpin sterling, albeit temporarily. “The inflation expectations show a slight nudge higher,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “I’d suggest there’s not too much there for sterling to sustain the recovery. A move higher toward the $1.5100 area should provide another selling opportunity.” The GBP/USD is currently trading at $1.5065 as of 20:30pm, GMT, with a bearish trend.

The euro rose against most major currencies as German government bonds dropped to the lowest level in more than two weeks on optimism Greece’s budget- deficit crisis has been contained. “There’s been a lot of stabilization in Greece,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “Every day we’re moving slowly higher. That’s a good sign for the euro generally.” Goldman Sachs Group Inc. cut its forecasts for the euro against Norway’s krone, the Swiss franc, the Swedish krona and Polish zloty, citing an “increasing focus on growth differentiation.” Harvard University Professor Martin Feldstein said the euro’s 4.5 percent decline against the dollar this year has been “panic selling” stemming from the Greek crisis. The EUR/USD is currently trading at $1.3675 as of 20:50pm, GMT, with a bearish trend.

Global currency trading rose to $2.7 trillion a day between April and October, the first growth since the six months to April 2008, the Reserve Bank of Australia said, citing data from five markets. Transactions increased by 17 percent from the previous six months, the RBA said in a report based on figures from Australia, the U.S., U.K., Canada and Singapore. These markets account for more than 60 percent of world currency trading, the RBA said. “The broad-based increase in turnover is in line with improvement in global economic and financial conditions since early 2009,” Crystal Ossolinski and Andrew Zurawski, who work in the RBA’s international department, wrote in the report.

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