Sterling bounces back from five-week low

The pound sterling rebounded on Wednesday after hitting a five-week low the previous day, rising 0.27 per cent to $1.2726.

This uptick comes after the pound fell to $1.2674 on Tuesday, its lowest level since early July, amid expectations of rate cuts by the Bank of England (BOE) and recent market volatility affecting riskier currencies.

The focus on Wednesday was primarily on the Japanese yen, which dropped significantly after Bank of Japan Deputy Governor Shinichi Uchida downplayed the likelihood of near-term rate hikes due to market volatility.

His comments reassured global markets, which had been unsettled by a rapid rise in the yen, leading to a significant rally in sterling against the Japanese currency.

Sterling rose sharply against the yen, climbing 1.88 per cent to 186.92 yen, although it remains 3 per cent lower for the month following the yen’s recent surge.

The yen’s depreciation followed Uchida’s dovish remarks, which provided relief to markets and led to a rebound in Japanese equities.

Additionally, the pound strengthened against the euro, which fell 0.44 per cent to 85.78 pence after reaching a three-month high of 86.2 pence on Monday. The euro had rallied earlier in the week as investors moved away from the dollar due to weak US economic data.

Attribution: Reuters