For the past five weeks, selling the pound on the view that U.K. interest rates won’t budge has been a profitable trade. That’s now fizzling.
The pound rose against the dollar for a third straight day, even as U.K. government bonds advanced following a report that showed a surprise drop in investment and a slump in exports. Sterling gained 1.2 percent since dropping to a 14-month low last week, a sign to some that the possibility of another year of record-low interest rates is already factored into the price.
“Expectations have shifted so massively that the potential for surprises on the downside are quite limited,” said Ulrich Leuchtmann, the head of currency strategy at Commerzbank AG in Frankfurt. “This change in monetary policy is becoming a little bit off the table as a main driver for sterling.”
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.