Sterling heads towards 1-week highs on weak dlrReuters | Updated: 09-04-2020 14:16 IST | Created: 09-04-2020 14:16 IST
The pound firmed towards a one-week high on Thursday, buoyed by a weak dollar despite data showing that Britain's economy stagnated in the three months to February before the coronavirus crisis escalated. Gross domestic product rose by 0.1% in the December-February period, the Office for National Statistics said, weaker than a median forecast for growth of 0.2% in a Reuters poll of economists.
Against the dollar, the pound gained a quarter of a percent to $1.2419, shy of a one-week high. While the pound has generally held firm against the dollar in recent days, it has failed to break above the $1.25 line. Versus the euro, it faced similar headwinds around the 87.50 levels with some analysts remaining bearish about the British currency's prospects against the euro as some European countries such as Austria and Denmark plan their exit strategies from a lockdown while the United Kingdom is planning on extending a similar shutdown.
"I think their actions are likely to improve sentiment towards the euro as investors realize that the first countries to take steps to deal with the virus will be the first ones to get back to some semblance of normality," said Marshall Gittler, head of investment research at BDSwiss. On a weeky basis, the British currency was poised for a tiny marginal gain of about 1%, aided by a broader drop in currency market volatility.
Expected swings in the British currency for one-month maturities dropped for a third consecutive week and held near a one-month low. The recent swings of the British currency has left the pound just shy of a 2020 high on a trade-weighted valuation basis at 78, according to Bank of England data.
News the Bank of England has agreed temporarily to finance government borrowing in response to COVID-19 if funds cannot immediately be raised from debt markets had no impact on the pound but pushed gilt yields higher.