Forex News – Sterling hits new 7-week high against dollar

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Sterling hit a fresh seven-week high against the dollar in the US session on Friday, hitting 1.6151by 15:08 GMT.

The pound is on track for marking its biggest monthly gains against the dollar since April, helped by a strong rally in riskier currencies after the euro zone deal and solid U.S. growth data eased concerns about a slowdown in the global economy.

Sterling’s stunning performance could last until the G20 Summit but could fade soon after as the British economy still shows signs of sluggish recovery as shown in recent economic data. A survey by GfK NOP today showed British consumer confidence has fallen to its lowest level since February 2009, adding to evidence the economy risks returning to recession.

Furthermore, additional quantitative easing that the Bank of England announced after its policy meeting recently is usually negative for the currency because it results on flooding the economy with more money.

Valentin Marinov, currency strategist at Citi, said while resilient investor risk appetite ahead of the G20 summit on Nov. 3-4 could lend support to sterling in the near term, he was sceptical the rally could be sustained into the year end.

“Further slowdown of the UK economic recovery could necessitate more asset purchases by the Bank of England and these need not necessarily be supportive for sterling,” he added.