Sterling hits a 5 month high against dollar

As Sterling advanced to a five month high against the Dollar this morning (GBP/USD 1.5533) currency strategist, Marc Cogliatti from HiFX explains the implications: "The news of a stronger Pound will help ease some of the tensions felt by UK importers, however we would suggest that all companies should be wary of getting too carried away. The global economy is still very fragile and volatility in the currency markets is likely to remain an important driver going forward.

"The pound has been buoyed by a continued surge in the equity markets. In recent months there has been an inverse correlation between equities and the Dollar and this continues to remain the dominant theme in the currency markets. Whilst equities were tumbling and the Dollar was in high demand, Sterling was one of the currencies that suffered most. However, with increased optimism surrounding both the UK and Global economies, the Pound has come back into focus again and is becoming an increasingly attractive prospect for the speculative market.

"Whilst it is still too soon to be calling an important base for GBP/USD, these are encouraging signs for Sterling. The break through $1.5350 yesterday morning means that the upward trend dating back to mid March is still intact and thus there is scope for this recovery to continue further in the weeks and months ahead."