Home Economy Diverted Dollar Strength Could Weigh

Diverted Dollar Strength Could Weigh

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  • GBP/USD still vulnerable to slippage below 1.30
  • Diverted USD strength & Fed policy could weigh
  • If PBoC aids EUR & JPY to fend off FX strength

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The Pound to Dollar exchange rate remains suppressed and at risk of further lurches below 1.30 over the coming days due to continuing strength of the U.S. Dollar and likely side effects of a possible People’s Bank of China (PBoC) effort to fend off unwanted strength in the Renminbi.

Sterling rallied by more than 100 points against the Dollar last Wednesday but its burst of strength ebbed quickly and the Pound-Dollar rate later fell back to 1.3000 where it entered the holiday-shortened week this Tuesday. 

“GBP/USD can remain heavy this week near 1.3000. Bank of England (BoE) Governor Bailey speaks on Thursday. Financial markets will be looking for any hints as to whether the BoE is more concerned about high inflation or the hit to disposable income from higher energy prices,” says…

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