Connect with us

Hi, what are you looking for?

Editor’s Pick

Pound hits three-month high against dollar as US inflation cools

The pound rose above $1.20 for the first time in almost three months yesterday as expectations grow that inflation in the US has peaked.

American producer prices rose by 0.2 per cent in October, half of what economists forecast. The annual rate of wholesale inflation fell sharply to 8 per cent, down from 8.5 per cent in September. Financial markets took the data to mean the US Federal Reserve may soon slow its aggressive interest rate rises which have weighed heavily on stock prices in recent months.

Last week, the expectation had been that the Fed would keep on lifting rates above 5 per cent, but that has now dropped back to a peak of 4.9 per cent early next summer.

The likelihood that US policymakers will raise interest rates by 50 basis points, as opposed to the 75 basis points they have previously gone for, at their next meeting in December has climbed to 91 per cent from 71.5 per cent a few days ago.

The cooling inflation data took steam out of the dollar which, until recently, has rallied strongly this year.

Sterling improved by 1.2 per cent to $1.1902 at the close of trading in London. Earlier in the session, the pound had briefly risen to $1.2027 for the first time since the middle of August. Other currencies, including the euro and the Japanese yen, also strengthened against the dollar.

The latest rally caps a sharp turnaround in the fortunes of sterling, which only six weeks ago, after the mini-budget, had fallen to a record low of $1.035.

David Stritch, a currency analyst at Caxton, said the pound may give up some of its recent gains tomorrow, when he expects Jeremy Hunt’s autumn statement to “force the hesitant [Bank of England governor] Andrew Bailey into a lower rate hike in December” than the market is expecting.

The prospect of a slowdown in interest rate rises lifted markets around the world. However, sterling’s rally meant that London’s blue chips missed out.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Editor’s Pick

More than half of all Londoners have either started their own business or aspire to do so in 2023, compared to nearly a third...

Editor’s Pick

The John Lewis Partnership has struck a £500m deal with the investment firm Abrdn to build 1,000 residential rental homes, redeveloping three sites already...

Editor’s Pick

The first four scale-up visa licences have been approved by the Home Office three months after the scheme began, prompting lawyers to question the...

Editor’s Pick

Barclays has been fined £8.4 million by the payments industry watchdog for failing to be transparent with retailers about the fees they were being...

Editor’s Pick

Ministers have called on Britain’s biggest rail union to be “altruistic” and suspend strike action over Christmas and new year amid warnings that it...

News

Dr. Nicanor G. Tiongson Filipino writers, poets, and playwrights play an important role in countering and correcting falsehoods running rampant in an extremely polarized...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.