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Forex - Pound hits 2.10 usd mark as dollar battered by Cheng comments Thomson
Financial The pound went above the physchologically important 2.10 mark against the dollar as the US currency continued to face severe pressure. At 9.28 am GMT, the pound was trading at 2.1010 usd, having hit a high of 2.1025. 'This is the first time the pair (sterling/dollar) has been at these levels since May 1981, but the rally is being driven by dollar weakness as opposed to pound strength,' said James Hughes, market analyst at CMC Markets. The latest bout of dollar selling has been sparked by speculation that China could be set to diversify its reserves away from the dollar given the US currency's current weakness.
This follows comments by vice chairman of China's National People's Congress Cheng Siwei, who said the country's forex regulator will 'shift' its foreign exchange holdings, and that China should consider shifting its forex reserves to 'stronger' currencies. 'Speculation that the Chinese government may further diversify its currency reserves is being seen as largely responsible for this move (in the dollar),' Hughes said.
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