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  • Writer's pictureanalysiswatch

Title: Euro and sterling cling onto overnight gains

May 18, 2022 02:21AM ET

By: AnalysisWatch

The pound and euro maintained most of their gains from the previous day on Wednesday, thanks to hopes of easing closures in China and a rise in US retail sales, which pushed investors towards riskier assets and hurt the dollar, a safe haven asset.

The European common currency touched $1.0564 at the start of trading in Asia, its highest in a week, after rising 1.1 percent overnight, its biggest day of percentage gains since March.

It was last slightly lower at $1.05355.

The pound stood at $1.24805, down from a two-week high of $1.2501 touched at the start of the session, after rising 1.4 per cent on Tuesday following data on Britain's unemployment rate, which hit a 48-year low.

It was not immediately affected by data that showed Britain's CPI stood at 9% year-on-year in April, the highest since official estimates began in the late 1980s, but marginally below expectations of 9.1%.

Bank of England Governor Andrew Bailey said Monday that the current surge in inflation is the central bank's biggest challenge since it gained independence in 1997.

The dollar index, which measures the greenback against six equivalent currencies, settled at 103.38 after hitting a low of 103.18 at the start of the session, the lowest in almost two weeks.

On Wednesday, Shanghai reached its fourth consecutive day with no new infections outside areas subject to the strictest closure measures, as residents await a relaxation of the rules currently scheduled for 1 June.

US retail sales raised sharply in April, driven by consumers buying more cars, improved supply and increased spending at restaurants.

Reflecting the general positive attitude towards risk sentiment, Asian stocks rose on Wednesday, following overnight gains on Wall Street

The dollar fell 0.2 per cent against the Japanese yen, as although data showed the Japanese economy contracted in the first quarter, it still beat expectations.

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