Pound inches higher

The pound has inched higher this morning, as a sense of calm returns to global markets today.

Sterling has gained a quarter of a cent against the US dollar, to $1.2255. Against the euro, it’s up 0.2% at €1.1389.

Relief that the turmoil in the banking sector has calmed, and optimism about the economic outlook, are lifting markets, says Marios Hadjikyriacos, senior investment analyst at XM.

Hadjikyriacos explains:  “Renewed concerns around the durability of the banking system plagued trading on Friday, with bank shares in Europe getting battered as fears of contagion spread.

“Yet, the mood improved once the latest US business surveys rolled out. These surveys painted a brighter picture of economic conditions, praising the resilience of demand in the services sector and highlighting a reacceleration in inflationary pressures. Similarly, business leaders did not appear particularly concerned about the impact of the banking episode on their operations.

“This was the catalyst for a miraculous comeback in stock markets, with the S&P 500 erasing some heavy losses to close higher by 0.5% in the end. Futures point to further gains when Wall Street opens on Monday, likely reflecting some relief that no other banks collapsed this weekend.”