Sterling hits a 5 week high against the euro

Sterling hit a five week high versus the Euro this morning as weak UK housing data was overshadowed by a large euro/sterling sell order, which traders said had a disproportionate market impact due to low liquidity.
 
With national holidays in much of Europe this Thursday and one coming up in the UK at the start of next week, liquidity in currency markets has been severely reduced, accentuating any flow-related moves, market participants said.

 
Sterling, whose fortunes have closely been linked to those of the financial sector in recent months, also got some support from a rise in banking shares and a general improvement in risk appetite.

The flows and a higher open on European stock markets overshadowed a second survey in less than a week showing UK house prices fell on the year for the first time since the late 1990s. Dealers also said sterling was still benefiting from a B of E report this week that suggested the cost of the global credit crunch may not be as much as some expected.

Right now Interbank is at 1.2827

source: IFX