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Sterling falls vs Dollar but stays close to 1-1.5 week high

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The Pound declined against the Dollar on Monday but remained close to last week's one-and-a-half-week high.


The greenback edged up as markets were spooked following the escalating violence in the Middle East.


At the time of writing, Sterling was down 0.4% at $1.2180 after hitting its highest point since the end of September on Friday, Reuters reports.


Whereas earlier in the week, on Wednesday, the Pound fell to a low not seen since mid-March of $1.2038. A weaker UK economic outlook coupled with the US economy's resilience weighed on the Pound amid expectations the Federal Reserve will increase rate again whilst there is more uncertainty surrounding the Bank of England's (BoE) hiking trajectory.


"We keep forecasting no further rate hikes by the BoE, but data and events scheduled this week in the UK might affect market expectations," said Roberto Mialich, global forex strategist at Unicredit.


He referred to the central bank's Financial Policy Committee Summary and Record, due out on Tuesday, as well as GDP data on Thursday.


Several analysts said last week's economic data from Britain have fuelled a degree of optimism. The S&P Global UK Services Purchasing Managers' Index fell to an eight-month low but surpassed a preliminary flash reading of 47.2.


Investors believe there is little chance of an additional rate increase by the Bank of England next month, but one more hike is forecast in 2024, the Reuters report adds.


Money markets are pricing in a 25% chance of a rise by the BoE in November, with a 40% chance in December and 50% in February.


Furthermore, according to Deutsche Bank senior economist Sanjay Raja, Thursday's Bank of England Credit Conditions Survey will be essential to understanding household consumption and business investment strength. 


He said despite the muted figures, households and businesses have been using their savings as opposed to borrowing.


"As such, adjusting for deposit flows, our estimate of the credit impulse sits at a positive 2.9% of GDP," he stated.


At the time of writing, Sterling was flat against the single currency at 86.44 pence per Euro.

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media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.