Reduced unemployment figures boost sterling

Sterling's exchange rate enjoyed a brief period of good trading against the dollar as the latest UK unemployment figures showed that benefit claims in December fell by 15,200.

The pound reached a high against the dollar of $1.63 to the pound at around 11:00GMT this morning (January 20th).

However, following this brief peak the currency continued a gradual decline, largely attributed to a continued lack of clarity from the Monetary Policy Committee, which has yet to explain its intentions for the economy.

Sterling reached a five-month high against the euro with a peak of €1.15 to the pound at 13:00GMT.

Analysts suspect that the euro's decline has been caused by a continued lack of confidence in Greece's economy.

The upcoming UK election also remains a pressing issue among traders as Adam Cole, global head of FX strategy at RBC Capital Markets, reminded Reuters.

"The market is cutting sterling some slack as the election may change the fiscal equation, no matter who wins."

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Posted by Eleanor Ward