# Pound hits one-year high against struggling dollar Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-08 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Sterling Soars to Over-One-Year High Against Dollar Amid U.S. Interest Rate Concerns Meta Description: Sterling hits over-one-year high against the dollar, traders watch as U.S. interest rates peak and inflation concerns loom. Bank of England rate increase URL: https://financedigest.com/pound-hits-one-year-high-against-struggling-dollarhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-08t010955z1lynxmpej47015rtroptp4usa-markets-fed-1736814053976-compressed.jpg) # Pound hits one-year high against struggling dollar By Tom Westbrook and Alun John SINGAPORE/LONDON (Reuters) – Sterling hit an over-one-year high against the dollar on Monday as the greenback began the week under pressure, with traders betting it might have peaked along with U.S. interest rates while keeping a wary eye on [looming inflation and loans data](https://www.financedigest.com/uks-ftse-100-gets-a-lift-from-commodities-as-u-s-inflation-data-looms.html "UK’s FTSE 100 gets a lift from commodities as U.S. inflation data looms"). The pound poked its head as high as $1.2668, its [highest since](https://www.financedigest.com/russian-inflation-accelerates-to-7-61-m-m-in-march-highest-since-1999.html "Russian inflation accelerates to 7.61% m/m in March, highest since 1999") April 2022, and was last trading a touch below that, up 0.26% on the day. The pound is in focus this week ahead of an expected [Bank of England](https://www.financedigest.com/explainer-why-is-bank-of-england-acting-again-what-next-in-the-uk-crisis-2.html "Explainer-Why is Bank of England acting again? What next in the UK crisis?") rate increase on Thursday, and has also been firming versus the euro. The European common currency was last at 87.23 pence, having dipped to 87.11 pence on Friday, its softest against the [British currency](https://www.financedigest.com/bitcoin-sterling-volumes-spike-to-record-high-as-british-currency-flounders.html "Bitcoin-sterling volumes spike to record high as British currency flounders") this year. Goldman Sachs on Friday revised their three-month forecast for the euro to 86 pence, and said: “we think that the same factors that acted as [headwinds on Sterling in 2022 – mostly natural gas prices](https://www.financedigest.com/gas-price-surge-just-one-more-headwind-for-world-economy.html "Gas price surge, just one more headwind for world economy") and the relative stance of BoE policy – have turned to tailwinds. Against the dollar, however, the euro has rallied nearly 16% from September lows, and was up 0.29% to $1.10505, supported by expectations the European [Central Bank will keep interest rates](https://www.financedigest.com/polish-central-bank-holds-rates-points-to-slowdown-ahead.html "Polish central bank holds rates, points to slowdown ahead") high for longer than the U.S. Federal Reserve. Last week the Fed raised [rates by 25 basis points but sounded slightly more cautious than peers on the outlook](https://www.financedigest.com/u-s-rate-outlook-hits-stocks-propels-dollar-to-20-year-highs.html "U.S. rate outlook hits stocks, propels dollar to 20-year highs"), dropping guidance about the need for future hikes. U.S. interest [rate futures are pricing about a one-third chance of a rate cut](https://www.financedigest.com/russias-2022-inflation-seen-at-13-4-more-rate-cuts-to-come-reuters-poll.html "Russia’s 2022 inflation seen at 13.4%, more rate cuts to come: Reuters poll") as soon as July, according to the CME FedWatch tool, in spite of stronger-than-forecast U.S. [jobs data](https://www.financedigest.com/chipmakers-weigh-on-european-shares-focus-on-u-s-jobs-data.html "Chipmakers weigh on European shares; focus on U.S. jobs data") released on Friday. The [ECB last week also slowed the pace of its interest rate increases but signalled](https://www.financedigest.com/dutch-governor-knot-signals-ecb-will-keep-raising-rates-in-months-ahead-ft.html "Dutch governor Knot signals ECB will keep raising rates in months ahead- FT") more tightening to come. [“Interest rate](https://www.financedigest.com/london-stocks-slip-ahead-of-key-interest-rate-decisions.html "London stocks slip ahead of key interest rate decisions") differentials between the Eurozone and US continue to narrow, removing a headwind for (the euro vs the dollar),” said Carol Kong, currency strategist at Commonwealth Bank of Australia. We expect EUR/USD to remain supported while [financial markets](https://www.financedigest.com/forget-the-funnel-financial-marketing-must-become-a-virtuous-circle.html "Forget the funnel: Financial marketing must become a virtuous circle") continue to price interest rate cuts for the US this year and further interest rate hikes from the ECB. The dollar index, which tracks the unit against six major peers, was down 0.25% at 101.06. [Last month’s](https://www.financedigest.com/monkeypox-emergency-could-last-months-with-window-closing-to-stop-spread-experts-say.html "Monkeypox emergency could last months, with window closing to stop spread, experts say") 100.78 was its lowest in a year. Later Monday, the Fed’s [loan officer survey might show whether and how hard banks](https://www.financedigest.com/alpha-bank-to-sell-bad-loan-portfolio-to-fortress-and-davidson-kempner.html "Alpha Bank to sell bad loan portfolio to Fortress and Davidson Kempner") are tightening up on credit after three U.S. lenders failed over recent weeks – which could weigh on the dollar if it [puts downward pressure](https://www.financedigest.com/analysis-war-in-ukraine-puts-pressure-on-east-european-banks-to-prop-up-sinking-currencies.html "Analysis-War in Ukraine puts pressure on East European banks to prop up sinking currencies") on interest rates. Traders will also be watching headlines from Capitol Hill as lawmakers attempt to negotiate an impasse over the looming U.S. debt ceiling, with the Treasury Secretary warning the [government might be unable to pay](https://www.financedigest.com/uk-trial-lawyers-to-end-strike-after-accepting-government-pay-offer.html "UK trial lawyers to end strike after accepting government pay offer") debts by June 1. U.S. [inflation data](https://www.financedigest.com/soft-lending-and-inflation-data-pave-way-for-smaller-ecb-hike.html "Soft lending and inflation data pave way for smaller ECB hike") is due on Wednesday. Elsewhere, the [dollar was 0.1% stronger](https://www.financedigest.com/dollar-stronger-as-inflation-worries-dampen-risk-sentiment.html "Dollar stronger as inflation worries dampen risk sentiment") against the yen at 135.02, though it dipped 0.24% on the Swiss franc the other traditional safe haven to 0.8885. The Australian [dollar hit](https://www.financedigest.com/u-s-dollar-struggles-pound-hits-one-year-high.html "U.S. dollar struggles, pound hits one-year high") a three-week high of $0.680, a gain of as much as 0.74% on the day. ======================================================== [Currency bid](https://www.financedigest.com/evergrande-jitters-pull-risk-currencies-lower-dollar-gains-on-safety-bid.html "Evergrande jitters pull risk currencies lower, dollar gains on safety bid") prices at 1121 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1047 $1.1019 +0.26% +0.00% +1.1054 +1.1016 Dollar/Yen 135.0300 134.7900 +0.16% +0.00% +135.2850 +134.7100 Euro/Yen 149.17 148.57 +0.40% +0.00% +149.2700 +148.6400 Dollar/Swiss 0.8887 0.8905 -0.21% +0.00% +0.8912 +0.8869 Sterling/Dollar 1.2661 1.2631 +0.25% +0.00% +1.2668 +1.2627 Dollar/Canadian 1.3342 1.3374 -0.25% +0.00% +1.3387 +1.3332 Aussie/Dollar 0.6791 0.6750 +0.60% +0.00% +0.6796 +0.6740 NZ Dollar/Dollar 0.6344 0.6293 +0.83% +0.00% +0.6347 +0.6294 All spots Tokyo spots [Europe spots](https://www.financedigest.com/malta-retains-top-spot-for-rainbow-europe-rights-say-activists.html "Malta retains top spot for ‘Rainbow Europe’ rights, say activists") Volatilities Tokyo Forex market info from BOJ (Reporting by Tom Westbrook; Editing by Alexander Smith and Chizu Nomiyama) --- This blog is powered by Superblog. 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