The Pound has seen good price movement against the lower-yielding currencies like the Dollar and the Yen today, as the FTSE 350 Banks Index gained and the UK currency also withstood a cut in the UK economic growth forecast from the Ernst & Young LLP Item Club. There have been some suggestions that the surprising acceleration in UK gross domestic product in the second quarter will mark the peak of the economic recovery. On Friday, the preliminary estimate of GDP in the three months to June rose 1.1%, almost double the expectations of 0.6% growth.

Sterling saw five month highs well above $1.55 versus the dollar in early US trade as sentiment towards the GBP continues to be underpinned by the more up- beat outlook for the UK economy that is emerging as well as the general pick up in market sentiment. The euro’s rebound versus the dollar though is helping to provide support versus the GBP which has retraced back from resistance at 1.30 after a rather range bound day of trading on the currency cross.

Underpinned by stronger market sentiment, the euro edged towards two month highs versus the dollar just shy of the key $1.30 level (resistance), though traders were cautious about bidding the single currency too high as markets await clarification on Deutsche Bank’s exposure to eurozone sovereign debt. The bank is the only leading financial institution that has not as yet revealed the extent of its exposures as part of the stress test results, though it is expected to do so later today.

Overall price action and market sentiment is rather mixed however it is advised both sellers and buyers into the USD should keep a close eye on the bullish movement witnessed on the GBP/USD cross. Intra day trading has seen the pair gain at a least a point on the day with a test of 1.5577 (Resistance) which could open up the way to a more significant upside move on the cross.

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