Sterling edges up against dollar, yen
LONDON, June 25 (Reuters) -The pound was one of the better performing major currencies on Tuesday, as a sell-off in the stock market and jitters around politics on both sides of the Atlantic drove more investors towards the comparative safety of the U.S. dollar.
Sterling GBP=D3 was last up 0.1% at $1.27, compared with declines in the value of the euro and yen.
The pound was trading around its highest in 16 years against the yen GBPJPY=R, which has weakened against the dollar JPY=EBS towards levels last seen in April that triggered official Japanese buying to support it.
Against the euro EURGBP=D3, the pound strengthened 0.1% to 84.51 pence, nearing last week's almost-two-year high.
A 10% sell-off in shares of megacap Nvidia NVDA.O over the last two trading days has unsettled investors, driving more flows into the likes of government bonds and the dollar.
Meanwhile, with a general UK election due on July 4, Bank of England policymakers are unlikely to give any new steer on where interest rates might head. Traders are pricing in roughly two rate cuts this year, with around a 55% chance of the first one coming in August. 0#BOEWATCH
This is in line with market-based expectations for the Federal Reserve, which has said it only sees the need for one U.S. rate cut this year.
"Looking at forward curves, it is remarkable that UK interest rates remain priced so close to the U.S.," ING strategist Chris Turner said.
"Our conviction view this summer is that UK rates will be re-priced lower starting with a rate cut in August. And this should lead to a lower pound," he said.
A recent Reuters poll of analysts offers a median three-month forecast of $1.26 for sterling, about 0.8% below current levels.
Graphic: World FX rates in 2023 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Reporting by Amanda Cooper; Editing by Tomasz Janowski
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
