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Sterling hits 1-month high vs euro, awaits UK jobs data
March 14, 2012 / 9:13 AM / 6 years ago

Sterling hits 1-month high vs euro, awaits UK jobs data

* Sterling hits 1-month high vs euro of 82.955 pence

* UK jobs data at 0930 GMT may limit its gains

* Sources say Britain could start selling 100-yr bonds

* Sterling edges higher vs otherwise firmer dollar

By Jessica Mortimer

LONDON, March 14 (Reuters) - Sterling rose to a one-month high against the euro on Wednesday, continuing the previous day’s gains as recent better UK data pointed to an improvement in the economy.

Traders said buying of the pound by a U.S. investment bank pushed the single currency through chart support levels and could leave it on track to test the early January low of 82.22 pence.

The pound’s gains could be tempered, however, if UK jobs data at 0930 GMT comes in weak. The UK claimant count measure of unemployment is expected to rise in February, though at a slower rate than the previous month.

The euro fell around 0.4 percent to a low of 82.955 pence, breaking below the early March low of 83.13 pence, where there was also support from a trendline drawn on the charts from the January low.

Its next target was the Feb. 16 low of 82.77 pence.

“Usually we have some impact from unemployment data but it has to be really good for sterling to react positively. I see a bigger risk of a higher unemployment rate,” said John Hydeskov, chief analyst at Danske Bank.

He added that the euro was also correcting after reaching a high of 84.24 pence on Tuesday, a move Hydeskov described as an “overreaction”.

Analysts also said the pound may have been supported as UK Treasury sources said Britain could start selling 100-year and perpetual bonds in an attempt to lock in low market interest rates to cut the future costs of servicing debt.

Sterling’s strengthening versus the euro helped it gain 0.1 percent to $1.5718 against an otherwise firmer dollar after the Federal Reserve sounded a less downbeat note on the U.S. economic outlook.

The pound extended strong gains versus the euro on Tuesday, helped by a narrower-than-forecast UK trade deficit. This also pulled it away from Monday’s seven-week low of $1.5603.

“Today, the UK labour market data will be published. A soft report is expected. In the recent past the reaction on the currency market to this report was mostly limited. So, we assume that the report will only be of intra-day importance for trading,” KBC analysts said in a note. (Editing by Stephen Nisbet)

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