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Sterling jumps against dollar on UK U-turn

By October 18, 2022No Comments

The dollar lost ground against sterling and other major peers today as investor sentiment picked up following the UK’s dramatic U-turn over the tax-slashing mini budget that had roiled global markets.

The British pound extended gains following a media report that the Bank of England is set to delay quantitative tightening until bond markets calm.

Sterling jumped 0.36% to $1.1398, approaching yesterday’s high of $1.144, the strongest level since October 5.

The Financial Times reported that the Bank of England is likely to delay the sale of billions of pounds of government bonds, in a bid to encourage greater stability in gilt markets.

That is after Jeremy Hunt, who was appointed finance minister by Prime Minister Liz Truss on Friday, reversed swathes of the £45 billion “mini-budget” that sent sterling crashing to record lows.

The euro added 0.14% to $0.9859, and touched $0.98655 for the first time since October 6.

The US dollar index – which measures the greenback against six major peers, including sterling, the euro and the yen – sagged 0.21% to 111.85, the lowest level since October 6.

The US currency weakened 0.13% to 148.82 yen after pushing to 149.10 late last night for the first time since August 1990.

New Zealand’s kiwi surged 1.1% to $0.56975. The UK news saw the currency extend gains from a report that showed consumer inflation continued to hover near three-decade highs in the third quarter, boosting bets for further rate hikes.

The Aussie strengthened 0.39% to $0.63185. It also got new life from developments in Britain, after receiving a short-lived boost in the Asian morning after minutes from the Reserve Bank’s last meeting showed the decision to slow the pace of rate hikes was “finely balanced.”

The central bank’s deputy governor Michele Bullock reinforced that by saying in a speech today that the RBA can keep pace with tightening by global peers.

Article Source: Sterling jumps against dollar on UK U-turn – RTE

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