Sterling vs US dollar: brace for more volatility
Sterling could struggle for direction amid multiple headwinds including sticky inflation, the BoE leaving the door open for another rate hike, an ongoing banking meltdown and a wait-and-see Fed, says IGTV’s Angeline Ong.
Sterling rollercoaster
First, we had the volatility thanks to the shock rise in inflation. Then, despite the ongoing banking meltdown, the BoE went ahead, as expected, with its 25 bps hike in a 7-2 vote split and has now left the door open for another hike. GBP/USD initially firmed on that decision, but then quickly reversed back to the 1.23 handle.
UK macro mix
UK retail sales, though, rebounded in February and the mood of the consumer hit a one-year high, showed the GfK even as people still felt quite gloomy about their finances. This may not improve anytime soon, if inflation remains uncomfortably high.
Outlook
This could led to the BoE to continue to tweak up rates, which would support sterling in this cross. Don't forget that cable will also be dictated by the dollar leg as the market continues to watch the Fed, after its dovish hike this week.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Live prices on most popular markets
- Forex
- Shares
- Indices
