Could Sterling be a safe haven for investors?

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According to reports, Libyan oil production is down by between a half and two thirds. That is especially bad news for Italy and Ireland, each of which imports nearly a quarter of its needs from Libya. Inevitably oil prices are on the rise with Brent oil topping $110 a barrel yesterday with scare-mongers predicting oil prices could double from current levels if the Libyan's situations continues through the region.

That concern continues to exercise not just the oil market but the financial world in general. Yesterday equity prices slid as investors sought safety however, they again failed to rush for what was once considered safe - the US Dollar.

Sterling is doing it's best to be seen as a safe-haven; yesterday the British Bankers' Association mortgage approvals were steady at 28,900 in January while the minutes from the Bank of England's MPC meeting in February revealed, as expected, a 6-3 vote in favour of keeping interest rates on hold. Adam Posen voted for an extension to quantitative easing and three members voted for an increase in interest rates with one of three, Andrew Sentance, voting for a 0.5% rise. The news enabled Sterling to spike higher but it wasn't able to maintain the initial gains.

A 2.1% increase in Eurozone industrial new orders and a 2.7% rise in the number of US existing home sales were largely ignored. The Australian Conference Board's leading index improved from 0.2% to 0.7% however, middle east tensions kept the Australian Dollar subdued.

By the end of yesterday's trading it seemed Sterling had maxed out its interest rate card. Everything expected by investors has been delivered and they are now turning their attention to the hardening line from the European Central Bank. It need not necessarily mean a downturn for Sterling but it does imply that further gains are going to be more difficult to achieve.