Yahoo Finance Pound stays strong against dollar as rally continues
The pound (GBPUSD=X) has rallied significantly over the last several days, climbing to a 10-month high against the US dollar.
Sterling hit $1.2546 on Friday morning, the highest since last June, as the dollar dropped on the foreign exchange markets on hopes that the US Federal Reserve could stop lifting interest rates soon.
Fawad Razaqzada, market analyst at City Index and FOREX.com, said: “The US dollar continued to weaken on Thursday, mostly against currencies where the central bank still remains hawkish, or the economic backdrop is improving.
The dollar has come under renewed pressure after more signs emerged that inflation has peaked.
Read more: Bank of England expects inflation to fall as pound hits 10-month high
“Traders are thus betting that the Fed will stop hiking interest rates, and soon it may even start loosening its policy again.”
The pound was also supported by a speech from Huw Pill, chief economist at the Bank of England, who said the path of inflation “may be bumpier than expected".
Victoria Scholar, head of investment at Interactive Investor, said: “The pound has hit a 10-month high against the US dollar while EUR/USD has rallied to the highest level since April 2022.
“Cable (GBP/USD) is up over 3.6% year-to-date and is up over 12% in 6 months since the fiscal fiasco around the mini-budget last September which heavily punished the British currency.
The pound has rebounded massively since the Liz Truss dark days - it's now at a 10-month high
The economy has done less badly than expected (it's still not great), and a slowdown in U.S. inflation has caused a big drop in the dollar pic.twitter.com/iWM24bRISV— Harry Robertson (@harrygrobertson) April 14, 2023
“Since the lows, the pound has been steadily regaining ground while the US dollar depreciates as traders price in the growing expectation that we are near the peak of the Fed’s rate hiking cycle. After last year’s bull run for the greenback driven by aggressive monetary tightening in the US, 2023 has seen King Dollar lose its crown with the euro and the pound appreciating significantly against it.
Read more: UK to be worst-performing economy in G7 this year, IMF says
“However there is still a long way to go to revisit the levels of dollar weakness seen at the end of 2020 and the beginning of 2021.”
Sterling has gained almost once cent this week, and is on track for its fifth weekly gain against the dollar in a row.
Watch: Interest rates may be 'near the peak' of hiking cycle : IMF economist
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