Sterling hits three-month low
Sterling hovers near three-month lows against the dollar amid rising energy prices and surging U.S. yields.
Anonymous
Sterling hovered near a three-month low against the dollar and euro on Friday, after a steep weekly decline, and edged higher as the dollar briefly paused. The dollar’s strength reflected rising energy prices tied to Middle East conflict, stronger U.S. economic data and higher Treasury yields, which have bolstered expectations of further Federal Reserve rate increases. The pound also faced doubts that the Bank of England would deliver the rate hikes markets have priced in, with analysts citing a subdued UK economic outlook and potential fiscal tightening as additional risks. Although the BoE has left rates unchanged, it has flagged that prolonged conflict could increase pressure to tighten policy.
Key Points
1
The U.S. 10-year Treasury yield rose above 5.20%, its highest level since 2007, while the 30-year yield reached its highest since 2004, adding to the dollar’s appeal.
2
CME FedWatch put the probability of a Federal Reserve rate increase at almost 58% for each of the two remaining policy meetings of the year.
3
Sterling briefly rebounded from an intraday low of 1.3209 to 1.3243 against the dollar, but technical analysis in the report described the pair as bearish below its 100-day moving average.
4
Scotiabank said further sterling weakness could take GBP/USD toward the mid-1.31s; the report identified 1.3140, the 2026 low, as a key downside level.
Sentiment
Mostly PositiveNEGATIVENEUTRALPOSITIVE
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