Sterling strengthens on Treasury proposal on multinationals

Story link: Sterling strengthens on Treasury proposal on multinationals

Sterling was stronger on Wednesday morning after reports in the press that Treasury is considering allowing multinational companies based in the UK to repatriate their foreign profits without having to pay any taxes on them. The proposal is seen as a way to convince multinationals to locate their headquarters in the UK. The idea, along with new figures showing that retail spending remained strong in March, led to a renewed likelihood that the Bank of England will raise interest rates again in May.

In late morning trade in London, the UK currency had added 0.3 percent to $1.9776 in relation to the US dollar, while it was 0.4 percent higher to £0.6783 versus the euro. Sterling added 0.5 percent to ¥236.16 against the yen.

The Japanese currency was weaker on the day after lower than expected machinery orders in Japan led most analysts to believe that it will be awhile before interest rates are raised there again. While the Australian dollar was flat against the yen at ¥98.33, the US dollar added 0.1 percent against the yen to ¥119.08.

The euro fell 0.1 percent versus the greenback to $1.3426 ahead of the next meeting by the European Central Bank, scheduled for Thursday. Most analysts expect that the ECB will hold interest rates steady this month. Some believe that there will be another Eurozone rate hike in May, while others do not expect another rise in interest rates to come until June.