Dollar hits low as traders brace

STERLING rose to an 11-year high against the US dollar today as dealers dumped the greenback before the release of crucial US trade figures.

The pound shot as high as $1.7496 at one stage, up 0.33% to levels not seen since Britain's ejection from the European Union Exchange Rate Mechanism in 1992.

The rise was despite a strong showing by Wall Street where the Dow Jones Industrial Average finished above the psychologically-important 10,000 barrier for the first time in more than 18 months.

While this was seen as a ringing endorsement for the US economy, analysts fear the trade figures will raise fresh concerns over the the country's ability to fund its widening current account deficit.

The trade figures, due at lunchtime, are likely to show the deficit widened to $41.5bn (£23.8bn) in October on a sharp rise in imports.

Concern over the deficit pushed the dollar to its eighth consecutive record low against the euro, $1.2276, on Tuesday. The dollar, which has since recovered, hit session lows of $1.2250 to the euro today.

Niels Christensen, currency strategist at Société Générale, said: 'It's a function of dollar weakness. We are getting US current account deficit later and that's always a concern.'

Wall Street was buoyed by minutes of October's meeting of the Federal Reserve which indicated interest rates could be left at 1% until the latter part of next year.

The Fed said that, even if the economy generated above average growth, there would still be too many unemployed workers and underused resources.