GBP climbs for the 6th consecutive day against USD
Wednesday 5 October, 2022
Daily Currency UpdateThe pound rose for the sixth consecutive day as investors welcomed the government’s U-turn on tax cuts. The pound dropped to a record low of $1.0327 on 26th September and bond prices tumbled after Chancellor of the Exchequer, Kwasi Kwarteng, unveiled plans to slash taxes, but the pound has recovered since their U-Turn, with GBP/USD gaining over 9% over the past week.
GBP's surge against the USD yesterday did falter later in the afternoon after Kwarteng insisted that he won’t present a more detailed version of his spending plans for another six weeks, dashing hopes for more immediate clarity on a fiscal policy.
The pound has fallen more than 16% this year against the US dollar. The US dollar has surged on the back of the US Federal Reserve’s aggressive rate hikes. It has also seen support due to its status as a safe-haven asset during periods of global economic and political uncertainty.
Key MoversThe US dollar index was last down 0.83% to 110.62 following a drop in US Treasury yields. US yields fell on Monday after survey data showed the US manufacturing sector slowed in September. They dropped further on Tuesday after more data showed that the number of US job vacancies fell more than expected in August. The weaker data caused some traders to believe that the Federal Reserve may raise interest rates less than expected.
Federal Reserve Governor, Philip Jefferson, reiterated overnight that inflation is policymakers' top target and that growth would suffer in efforts to bring it down. US labour data due on Friday will be the next major indicator of the likely trajectory of US interest rates.
- GBP/USD: 1.1385 - 1.1465 ▲
- GBP/EUR: 1.1465 - 1.1515 ▲
- EUR/USD: 0.9915 - 1.0025 ▲