It takes a lot of interest rate support to hold Sterling up, Kit Juckes, Chief Global FX Strategist at Société Générale, reports.Monetary policy expectations remain the biggest short-term driver of currency trends.Monetary policy expectations remain the biggest short-term driver of currency trends. There is a deep well of negative sentiment surrounding the UK and the Pound, that has been in place since the financial crisis and even more so since the Brexit referendum. But long-term concerns about growth can’t drive Sterling lower and lower in real terms – they merely ensure that it remains at a lower level than it was before.
The rate differential required to get Sterling above USD 1.30 today, is far wider than it was a few years ago. That won’t prevent Sterling from being resilient for now, as long as monetary policy tightening remains on the table, but once rates have peaked, in the US, UK, Eurozone and elsewhere, Sterling will look pretty vulnerable.
RECOMMENDED CONTENT
EDITORS’ PICKS
EUR/USD drops below 1.0950 as USD continues to gather strength
EUR/USD drops below 1.0950 as USD continues to gather strength
EUR/USD extended its daily slide and dropped below 1.0950 in the early American session on Tuesday. The US Dollar continues to benefit from the risk-averse market atmosphere ahead of this week’s key inflation data, forcing the pair to stay on the back foot.
EUR/USD News
GBP/USD slumps below 1.2700 as safe-haven flows dominate
GBP/USD slumps below 1.2700 as safe-haven flows dominate
GBP/USD stays under persistent bearish pressure on Tuesday and trades deep in negative territory below 1.2700 in the American session. The broad-based US Dollar strength amid risk aversion weighs heavily on the pair. Markets will keep a close eye on Fedspeak.
GBP/USD News
Gold slumps to fresh multi-week low below $1,930 despite falling US yields
Gold slumps to fresh multi-week low below $1,930 despite falling US yields
Gold price stretched lower and touched its weakest level in nearly a month below $1,930. The risk-averse market atmosphere and the renewed US Dollar strength drag XAU/USD lower. The benchmark 10-year US Treasury bond yield, however, is down more than 2% on the day, helping the pair limit its losses.
<a href=”https://clicks.pipaffiliates.com/c?m=7670&c=503446″><img src=”https://ads.pipaffiliates.com/i/7670?c=503446″ width=”120″ height=”600″ /></a>
Free Forex Signals 
Leave a comment