FX round-up: Euro's advance halted

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Date: Friday 18 Apr 2008

LONDON (ShareCast) - Sterling recovered its poise Thursday on expectations that the Bank of England and HM Treasury will soon announce a package that will relieve liquidity problems in the UK banking system.

The Bank of England has been criticised in some quarters for its lethargic reaction to the credit crunch and base rate cuts have had little impact in terms of reducing the costs of borrowing for consumers. Expectations are high that the Bank of England will change tack and allow banks to temporarily swap mortgage-backed securities for short-dated gilts.

The pound moved away from its record low against the euro to push the value of the common currency down to 80.38p. Sterling also advanced against the dollar in London trading, climbing to $1.9794, before rising beyond $1.99 in New York.

The US currency received a boost from comments by chairman of the Euro Group, Jean-Claude Juncker, which included numerous references to the “undesirable” rise in value of the euro.

The euro eased to $1.5895, down 55 cents, but above its New York low for the day of $1.5846.

The greenback also made headway against the Japanese yen, rising to 102.52 from Wednesday’s 101.82.

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