Sterling gains strength as investors head back to riskier currencies

Sterling pushed through the $1.59 on Tuesday as UK inflation data and a Spanish bond auction added support to the GBP/USD cross. UK inflation data increased slightly to 3.5% from 3.4% which reduced the possibility that the Bank of England will hold off from further monetary stimulus next month.

As the data was released pound/dollar rates rose from $1.5870 and passed $1.5960 and held around that level throughout the day.

Investors moved away from the greenback as appetite for riskier currencies increased after an auction of Spanish bill went better than expected. The troubled country sold more bills than forecast which was seen as a positive move for market players

When investors leave the safe-haven status of the greenback it weakens the U.S currency and therefore becomes cheaper to purchase. This is good news if you are buying dollars as you will receive more for your money.

As I mentioned in yesterdays post Wednesday will give us a good insight to how Sterling could perform over the next few weeks.UK jobs and claimant data will be released at 08.30 (GMT) along with the Bank of England minutes from their recent meeting. A positive outcome from both sets of data could see rates push rates back towards the $1.60 level we saw before Easter.

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