The US dollar continued to suffer from market predictions that the cycle of US rate hikes is about to come to a stop, as the British pound increased to a new 10-month high and the euro achieved its best level in two months.
Sterling rose 0.84 per cent to US$1.2521, its highest since June 2022, after breaching a significant resistance level. “US$1.2448 has been a huge technical chart resistance. It has been a high twice this year,” said Joe Tuckey, head of FX analysis at Argentex.
“Breaking through this means it is an initiation point for fresh sterling buyers, a short covering area for sterling shorts.” The euro reached US$1.0938, its highest level since early February, and was last up 0.14 per cent at US$1.0918 as the US dollar declined against the majority of other European currencies.
“We’ve been saying that FX hasn’t really captured what’s been happening in rates, and there is scope still for the US dollar to weaken a bit further,” said Derek Halpenny, head of research for global markets at MUFG.
“Short-term spreads between core Europe and the US are more consistent with euro-US dollar trading near US$1.10 to US$1.15.”