Pound sterling to euro exchange rate: Struggling below 1.18 as wind is taken out of sterling's wings

At 09:38 in London we see the pound to euro exchange rate trading 0.04 pct in the red at 1.1793. While 1.18 has not proven helpful in terms of support it would seem that markets are happy to give sterling the benefit of the doubt in the 1.1790's.

Wind taken out of sterling's wings

As Sasha Nugent at Caxton FX notes, it wasn’t so long ago that sterling was robust and pushing for 1.20.

"Now the currency is barely able to remain above 1.18. Manufacturing production figures took the wind out of sterling’s wings and this is likely to remain for the remainder of this session," says Nugent.

The BoE will announce its rate decision at 12pm, but this is unlikely to do much for the pound.

Below-expected French industrial production figures should provide sterling a cushion, however levels are unlikely to change much in trading today.

US dollar in comeback

Broader currency market direction continues to be dictated by the US dollar.

On Wednesday, the dollar staged a comeback as the nomination off ultra-dove Janet Yellen as new head of the Fed had no negative impact on the dollar.

"Rumours that US politicians were negotiating on a (short- term) budget deal and a decline in commodities might have been part of the reasons behind the USD rebound," says Piet Lammens at KBC Markets.
Intraday, EUR/USD jumped a few ticks north of the 1.36 barrier early in Asian on the back of the nomination of Janet Yellen as new Fed Chairwoman.

However, the move clearly had no strong momentum. EUR/USD even failed to take out Tuesdays top at 1.3607.

EUR/USD changed hands in the 1.3560 area at the start of trading in Europe and the dollar regained further ground throughout the session.