Pound hits 2-month high against struggling dollar
The pound rose against an embattled dollar on Wednesday to its highest this year, closing in on $2 as the outlook for the U.S. economy soured and expectations of Federal Reserve rate cuts increased further.
Dollar slumps to record lowThe pound has risen 3 percent versus the dollar over the last week as strong retail sales and mortgage data pared back expectations on the extent of monetary easing likely from the Bank of England.
Markets are now pricing in a less than one-in-three chance of a UK rate cut by June while Fed funds futures are pointing to 50 basis points of easing next month.
U.S. consumer sentiment hit a five-year low and Fed Vice Chairman Donald Kohn said on Tuesday that a weak economy was a bigger concern than inflation as the central bank tackles "difficult times".
"The weak numbers out of the U.S. and comments from the Fed have hit the dollar, and the pound has benefited as it has gone through some key levels," said Geraldine Concagh, economist at AIB Group Treasury in Dublin.
By 8.54 a.m., the pound had risen as high as $1.9971, up half a percent, and its highest since late December. The euro was up 0.2 percent at 75.49 pence.
Concagh added sterling could see fresh gains against the greenback later in the day pushing the pound above $2 if durable goods and homes sales data is weak.
Revised fourth quarter GDP data is due at 9.30 a.m., with growth seen confirmed at a quarterly 0.6 percent.
(Reporting by Simon Falush; Editing by Chris Pizzey)
- 1 RBS gets Chinese approval for Suzhou stake
- 2 June retail sales fall less than expected
- 3 Birth control battle weighs on Philippine economy
- 4 Saudi Telecom in sponsorship deal with Man United
- 5 Glasgow loss deals blow to Labour
- 6 Besley says fighting inflation tough task
- 7 Asia stocks at two-year low
- 1 Banks may avoid worst of household debt pain
- 2 FAA proposes 3.8 million fine against American
- 3 Swaps spreads highlight credit stresses
- 4 Slower economy saps climate action
- 5 Besley says fighting inflation tough task
- 6 Poll shows leader swap would not save Labour
- 7 Weak sterling may not curb recession
|
- 1 Commodities and China hopes lift FTSE in early trade
- 2 Asia stocks plumb two-year low
- 3 FTSE falls 1.1 pct as fresh credit fears hit banks
- 4 Oil falls below $112 a barrel to 4-month low
- 5 Asia stocks at two-year low
- 6 Oil rises over $1 on Gulf of Mexico storm threat
- 7 FTSE up as crude falls ease inflation fears
|
|
