Sterling hits 1-m high as dollar weakens

The pound sterling reached a one-month high against the dollar on Monday, buoyed by expectations of US interest rate cuts and broader market sentiment shifts.

The pound was up 0.2 per cent to $1.2963, peaking at $1.2975 earlier in the session. This surge follows growing anticipation around Federal Reserve Chair Jerome Powell’s and Bank of England (BoE) Governor Andrew Bailey’s speeches at the Jackson Hole central bankers’ conference on Friday.

The dollar fell to a seven-month low against major currencies amid speculation of a dovish tone in the Fed’s July meeting minutes, due on Wednesday. Against the euro, sterling touched a two-week high of 85.09 pence per euro, last seen at 85.15 pence.

The pound has rebounded 2.3 per cent since hitting a one-month low of $1.2666 on August 8. Market expectations suggest a 39 per cent chance of the BoE cutting rates by 25 basis points to 4.75 per cent in September, with potential total cuts of 44 basis points by year-end.

The August PMI readings on Thursday may provide further insight into UK economic conditions.

Attribution: Reuters

Subediting: M. S. Salama