The US dollar continued higher this morning after Federal Reserve Chairman Mr Alan Greenspan's upbeat assessment of the US economy.
Mr Greenspan's upbeat economic assessment to Congress saw the dollar rise yesterday against the euro, and this strength carried into today with the greenback at $1.2252 to the single currency.
The dollar's gains were sparked by Mr Greenspan sprinkling phrases such as "economic activity has quickened" and "expansion has become more broad-based" through his unexpectedly hawkish address.
Mr Greenspan also raised the Fed's inflation projection for 2004 to 1.75-2 per cent, from 1-1.25 per cent, while predicting GDP growth of 4.5-4.75 per cent in 2004 and 3.5-4 per cent in 2005.
At 9.27 a.m. the dollar was trading at £0.5444 sterling. The British pound weakened against the dollar despite the expectation of another rate rise in August. Against the euro, sterling was trading at £0.6669 this morning.