The pound rose to the highest in 5 1/2 years against the dollar after the Federal Reserve said it would keep interest rates near zero while the U.K. is moving closer to raising borrowing costs.
U.K. government bonds erased gains as Bank of England policy maker Ian McCafferty said an early start to interest-rate increases may be warranted. BOE Governor Mark Carney said on June 12 that the first interest-rate increase “could happen sooner than markets currently expect.” Sterling has risen against all of its developed-country peers in the past month as investors pushed forward their expectations of when policy makers will raise the main interest rate.
“If it’s a choice between central banks that are keeping rates low for a very long period of time or a central bank that is actually relatively hawkish, I think it’s quite simple,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “Sterling is the one out of all the Group-of-seven currencies that’s got the opportunity to do something quite significant.”
Recommended Content
Editors’ Picks
How will US Dollar react to Q1 GDP data? – LIVE
The US' GDP is forecast to grow at an annual rate of 2.5% in the first quarter of the year. The US Dollar struggles to find demand as investors stay on the sidelines, while waiting to assess the impact of the US economic performance on the Fed rate outlook.
EUR/USD holds gains above 1.0700, as key US data loom
EUR/USD holds gains above 1.0700 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.