Pound hits one-year high against struggling dollar By Reuters

Written by Tom Westbrook and Elon John

SINGAPORE/LONDON (Reuters) – The pound hit its highest level in more than a year against the dollar on Monday as the greenback started the week under pressure, with traders betting it may have peaked with US interest rates while paying attention to looming inflation. and loan data.

The pound reached a high of $1.2668, the highest level since April 2022, and was last trading lower than that, up 0.26% on the day.

The Pound is in focus this week ahead of the Bank of England’s expected rate hike on Thursday, and it is also rising against the Euro.

The single European currency was last at 87.23 pence, after falling to 87.11 pence on Friday, its lowest level against the British currency this year.

Goldman Sachs (NYSE:) on Friday revised its three-month forecast for the euro to 86p, and said: “We believe the same factors that have been a headwind for sterling in 2022 — mostly rates and the relative stance of BoE policy — have turned into a tailwind.” “.

Against the dollar, the euro rose nearly 16% from its September low, rising 0.29% to $1.10505, supported by expectations that the European Central Bank will keep interest rates higher for longer than the US Federal Reserve.

Last week the Fed raised interest rates by 25 basis points, but sounded a bit more cautious than its peers on the outlook, dropping guidance on the need for future increases.

US interest rate futures are pricing in a one-third chance of a rate cut as soon as July, according to CME FedWatch, despite stronger-than-expected US jobs data released on Friday.

The European Central Bank also last week slowed the pace of interest rate increases, but signaled further tightening ahead.

“The interest rate differentials between the eurozone and the US continue to narrow, which removes the (euro-dollar) headwind,” said Carol Kong, currency analyst at Commonwealth Bank of Australia (OTC:).

“We expect to remain supported as financial markets continue to cut interest rates for the United States this year and further rate hikes from the European Central Bank.”

This, which tracks Unity against six major peers, was down 0.25% at 101.06. 100.78 last month was the lowest in a year.

Later on Monday, the Fed’s Loan Officers survey may show if, and how, banks are tightening credit after three US lenders failed in recent weeks — which could weigh on the dollar if it puts downward pressure on interest rates.

Traders will also be watching headlines from Capitol Hill as lawmakers try to negotiate a deadlock over the looming US debt ceiling, with the Treasury secretary warning that the government may be unable to repay debt by June 1st.

US inflation data is due on Wednesday.

Elsewhere, the dollar was 0.1% stronger against the yen at 135.02, although it was down 0.24% against the Swiss franc, the other traditional safe haven, to 0.8885.

The Australian dollar hit a three-week high of $0.680, gaining 0.74% on the day.

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The currency bid prices are at 1121 GMT

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

previous change

a class

euro/dollar

1.1047 USD 1.1019 + 0.26% + 0.00% +1.1054 +1.1016

dollar / yen

135.0300 134.7900 + 0.16% + 0.00% + 135.2850 + 134.7100

euro / yen

149.17 148.57 +0.40% +0.00% +149.2700 +148.6400

dollars / Swiss

0.8887 0.8905 -0.21% + 0.00% +0.8912 +0.8869

British pound / dollar

1.2661 1.2631 + 0.25% + 0.00% +1.2668 +1.2627

Canadian Dollar

1.3342 1.3374 -0.25% + 0.00% +1.3387 +1.3332

Australian dollar / dollar

0.6791 0.6750 + 0.60% + 0.00% +0.6796 +0.6740

NZ

USD/USD 0.6344 0.6293 + 0.83% + 0.00% +0.6347 + 0.6294

All spots

locations in Tokyo

Spots in Europe

twists

Tokyo forex market information from Bank of Japan