Sterling hits 3-week high against euro, flat vs dollar

Credit: REUTERS/BENOIT TESSIER

By Iain Withers

LONDON, April 2 (Reuters) - Sterling hit a three-week high versus the euro on Thursday and held recent gains versus the dollar, as the British currency was swept up inglobal marketswings that weakened the euro broadly.

The pound has rebounded in recently after crashing amid coronavirus-driven panic in global markets last month to levels not seen in more than a decade versus the euro and since 1985 against the greenback.

It climbed further versus the euro on Thursday as the single currency slid broadly on investor concerns at disagreement between euro zone governments over a rescue package for countries struggling to cope with the coronavirus pandemic.

Sterling was last up 0.9% versus the euro at 87.76 pence per euro, its highest level since March 11. EURGBP=D3 The dollar made a similar 1% gain on the euro. EUR=EBS

"The lack of agreement in the euro zone so far is a disappointment. They are fighting over the detail," said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

"The lesson from the 2010 crisis is euro zone politicians need to be pressured into an agreement."

Against the dollar, sterling was flat at $1.2374, after shedding its earlier gains after risk sentiment in markets faltered on dire U.S. jobless data. GBP=D3 However, it has retained gains made over the past week.

Risk appetite was also broadly firm as Wall Street bounced on Thursday as a recovery in oil prices outweighed the shock of weekly U.S. jobless claims soaring past 6 million. O/R

Analysts say sterling has benefited broadly in recent weeks from co-ordinated action by central banks including the Bank of England to ease a mad scramble for U.S. dollars, the world's most liquid currency seen as a safe haven in times of crisis.

This has eased selling pressure on other currencies seen as riskier, including the pound.

Stimulus packages by governments to limit the economic hit from the coronavirus pandemic have also helped support sterling, although economists are still predicting a huge global downturn.

The pound remains down against both the single currency and the dollar since the start of the year, by around 4% and 7% respectively.

"Action by central banks to ease dollar supply has helped sterling to return to calmer waters," said Kenneth Broux, FX strategist at Societe Generale.

(Reporting by Iain Withers; Editing by Kirsten Donovan and Susan Fenton)

((Iain.withers@tr.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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