Sterling slipped against the dollar on Tuesday, as worries stemming from growing tension in North Africa and the Middle East prompted investors pare back positions in riskier assets. Factors influencing the pound on the day were largely external, but domestic event risk loomed with policy minutes from the February Bank of England meeting on monetary policy due for release on Wednesday. What we have seen is a flock to the safe heaven currencies such as the JPY (Japanese Yen) and CHF (Swiss Franc) which have both seen strength throughout the day.

“The enthusiasm for the pound has waned a little bit amid the search for safe havens, or at least the avoidance of risk currencies that do not offer upside on higher oil prices,” said Daragh Maher, deputy head of global foreign exchange research, at Credit Agricole.

Rising oil prices weighed on stocks and triggered profit-taking in currencies perceived as higher risk. The pound was also lagging the euro which received a boost from hawkish comments from European Central Bank policymaker Yves Mersch. Mersch was quoted as saying he would not be surprised if the bank sharpened its language on inflation. Following this the Euro was up 0.3 percent on the day at 84.55 pence , recovering from a brief show under 84.00 in European trading. Since the US market opened the Pound has lost out against virtually all of its counterparts, and with tomorrow playing key focus in the markets buyers are advised to be cautious.

Tom Trevorrow