3rd April 2008 Currency Update: The pound strengthens for the third straight day

Sterling strengthened for a third straight day against the euro this morning, recovering from a record low on Monday as a slight return of investor confidence encouraged a move back into the high-yielding currency.

But poor sentiment for the pound was reflected in sterling falling against the dollar in choppy conditions, as a gloomy outlook on the UK economy kept investors focused on prospects for more interest rate cuts from the current 5.25%.

The B of E aims to cut interest rates only gradually to cushion the blow from the credit crunch but may need to let the economy slow to curb inflation, central bank policymaker Paul Tucker said late on Wednesday.

However PMI data has just come out slightly weaker than expected which has had a slight knock on the recent Sterling strengthening. Right now Interbank is at 1.2675 with Natwest offering 1.2141. source: IFX