Pound Surges Against US Dollar
- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- July 27, 2017
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Sterling hit a 10-month high against a broadly weaker dollar today, after the U.S. Federal Reserve left policy unchanged and appeared less confident about inflation picking up, which investors took as a sign rates could be kept low for longer.
The market focused on the central bank’s noting that both overall and core inflation had declined, and its removal of the qualifier “recently,” which they saw as potentially reflecting concerns that a slowdown in consumer price rises might not be temporary.
With the dollar skidding across the board, the pound took advantage, hitting as high as $1.3157, its highest since mid-September.
Against the euro, it has been a different story for sterling. As the single currency has rallied both on dollar weakness and expectations that the European Central Bank will tighten monetary policy last year, the pound has fallen to eight-month lows in recent weeks.
Data on Wednesday showed Britain’s economy gathered only a little speed in the second quarter after almost stalling at the start of the year, pouring cold water on expectations for UK interest rate hikes in the coming months.
Strategists say developments around Brexit will continue to be the main driver for the pound, which has fallen around 13 percent against the dollar since last June’s referendum.
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