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Sterling steady near one-month high
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LONDON (Reuters) – The British pound traded little changed against a faltering U.S. dollar on Monday but was still set for its first monthly gain in five as the risk-sensitive currency benefited from improving sentiment.
LONDON (Reuters) – The British pound traded little changed against a faltering U.S. dollar on Monday but was still set for its first monthly gain in five as the risk-sensitive currency benefited from improving sentiment.
As markets have readjusted their rate hike expectations from the Federal Reserve lower, the dollar index has weakened over 3.5% from its mid-May peak. This helped lift sterling after it reached its lowest level since March 2020 earlier in the month.
“The rebound in GBPUSD largely reflects USD depreciation,” said Vasileios Gkionakis, EMEA Head of CitiFX G10 Strategy, who remains bearish on sterling against the euro and commodity FX, citing weakening growth, depleting household savings, absence of meaningful fiscal stimulus and a likely resurfacing of Northern Ireland protocol-related headlines.
Trade was likely to be light through Monday as U.S. stock and bond markets close for the Memorial Day public holiday, while the UK calendar is looking light this week with markets closed on Thursday and Friday for the Spring Bank Holiday and Queen’s Platinum Jubilee.
At 0814 GMT, the pound was little changed against the dollar at $1.2628, just off Friday’s monthly high of $1.26665.
Against the euro, sterling was down 0.2% at 85.13 pence.
Despite sterling’s recent recovery against the dollar, data on Friday released from the Commodity Futures Trading Commission (CFTC) showed investors slightly added to their sterling net short position in the latest week.
The net short position now stands at $6.3 billion, the largest short since 2019.
(Reporting by Samuel Indyk; Editing by Toby Chopra)
The British pound, often referred to as GBP, is the official currency of the United Kingdom. It is one of the oldest currencies still in use and is known for its stability.
Currency hedging is a financial strategy used to reduce the risk of adverse price movements in foreign exchange rates. It involves using financial instruments to offset potential losses.
The Federal Reserve, often called the Fed, is the central bank of the United States. It regulates the U.S. monetary and financial system and influences interest rates and inflation.
Market sentiment refers to the overall attitude of investors toward a particular security or financial market. It is often driven by news, economic indicators, and market trends.
A short position is an investment strategy where an investor borrows shares and sells them, hoping to buy them back at a lower price. It is used to profit from a decline in the asset's price.
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