Sterling reaches a 15-month high as the dollar declines in early trade

12 Jul 2023 , 12:23 PM

On Wednesday, the dollar fell to a two-month low vs its key competitors ahead of a crucial U.S. inflation reading, while sterling reached a 15-month high on anticipation that the Bank of England (BoE) will continue to raise interest rates.

Later on Wednesday, the United States will release data on inflation. It is anticipated that core consumer prices increased 5% annually in June. The data should also shed further light on how the Federal Reserve is doing in its battle against inflation.

Prior to the report, the U.S. dollar dropped to a two-month low versus a basket of currencies, extending the week’s losses as Fed members stated that the central bank was nearing the end of its current cycle of tightening monetary policy.

The euro gained 0.07%, flirting with Tuesday’s two-month high of $1.1027, to reach $1.1018.

In other news, early Asian trading saw sterling reach a 15-month high of $1.2940, supported by predictions that the BoE will need to tighten monetary policy much more in order to control British inflation, which is now running at the highest pace of any major economy.

Data released on Tuesday revealed that basic earnings in the three months to May increased by 7.3%, above forecasts of a 7.1% increase and marking the joint greatest rate of growth in British wages ever.

According to current market estimates, the BoE will raise rates by another 140 basis points.

The assumption that the Bank of Japan (BOJ) would alter its contentious yield curve control (YCC) policy at its forthcoming meeting this month helped the Japanese yen rise over the 140-per-dollar mark on Wednesday, reaching a peak of 139.54 per dollar.

The Reserve Bank of New Zealand (RBNZ), which will decide on monetary policy later on Wednesday, is expected to keep interest rates on hold. As a result, the New Zealand dollar increased 0.34% against other currencies to $0.6219.

For feedback and suggestions, write to us at [e-mail]