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FX round-up: Sterling up vs the dollar

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Date: Tuesday 11 Mar 2008

LONDON (ShareCast) - Sterling moved up against the dollar after a stronger than expected rise in manufacturing output during January left many analysts betting that interest rates will be gradually dropped this year.

The Office for National Statistics (ONS) said manufacturing production, which accounts for around 15% of Britain’s economy, grew 0.4% at the start of the year. That’s stronger than the 0.1% rise analysts had predicted and was the biggest increase since last October.

Meanwhile, factory gate inflation remains at its highest in 16 years, with manufacturers’ input prices leaping 1.7% between January and February.

The input price index for materials and fuels purchased by the manufacturing industry rose 19.4% in the year to February, due mainly to the rise in crude prices.

The dollar continued its foray lower after ECB President Jean-Claude Trichet said he was concerned about the recent excessive movement in the exchange rate.

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