The Pound to Dollar exchange rate attempted to stabilize after dropping to seven-month lows below 1.3150, as the recent surge of the US Dollar paused.
Sterling found minor support as Treasury yields eased and oil prices fell, though investors continue to favor the Dollar due to expectations of stronger US economic growth and higher Federal Reserve interest rates.
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Market Movements and Analyst Views
According to UoB, the currency pair dipped to fresh seven-month lows below 1.3150 on Wednesday before a tentative rally to 1.3190 on Thursday, with key support remaining around 1.30.
"A breach of 1.3200 would indicate that GBP is more likely to range-trade rather than testing 1.3135," commented UoB.
Domestically, UK bond markets are closely watching political developments as current Chancellor Reeves backs Burnham to succeed Starmer as Prime Minister, amid chatter that Reeves will be replaced.
ING noted that while the US currency has halted its run due to stabilizing risk sentiment, a renewed tech sector jitter could trigger more safe-haven demand.
"The dollar seems to have halted its run on some risk sentiment stabilisation, but it's still early to rule out another leg higher in the greenback.
Any new signs of AI jitters could be the catalyst for more safe-haven-related dollar demand," commented ING.
The bank suggested that the peak of the current greenback rally might be approaching.
"At the same time, our baseline view remains that we are not far from the peak in this dollar rally," added the bank.
