Pound Rises 0.7 Percent Against the Dollar as Risk Mood Lifts Sterling

The pound rose 0.71 percent against the US dollar in the Orbit Post market wire snapshot early on Tuesday, trading at 1.3455 dollars, up from 1.336 dollars in the previous snapshot. The gain extended a Monday rebound that reversed most of the fall sterling took on Friday, when a selloff in AI stocks pushed investors toward the dollar.

Why the dollar eased

Reuters reported on Monday that the pound was last up just over 0.5 percent at 1.3421 dollars, having fallen more than 0.7 percent on Friday. The concerns over AI stocks that had lifted the dollar at the end of last week eased, and oil prices fell. That brighter backdrop cut demand for safe-haven assets such as the dollar. Brent crude futures fell 3.2 percent to 95.16 dollars a barrel after President Donald Trump downplayed the likelihood of renewed US strikes on Iran, Reuters said, though attacks on ships near the Strait of Hormuz kept supply worries alive.

Dow Jones Newswires, in a Morningstar market briefing, also reported that the dollar eased on Monday as investors looked ahead to US inflation data, and said sterling could rise further, supported by steady economic growth in the United Kingdom, citing currency firm Convera.

The Bank of England still backs sterling

The pound has also drawn support from the Bank of England. Reuters noted early on Tuesday that sterling has gained support since the central bank raised interest rates last week for the first time in three years. On Monday the pound held at 83.41 pence per euro, steady on the day and not far from a 20-month high reached last week, after the Bank raised rates and hinted that more tightening is likely unless the Iran war de-escalates and pushes oil prices lower.

What happens next

Two reports will test the move. US consumer price data for October is due on Tuesday. Economists polled by Reuters expect headline inflation of 3.9 percent from a year earlier and core inflation of 2.8 percent. A hotter reading would add to bets on a Federal Reserve rate increase next month, which markets priced at an 85 percent chance after a strong October jobs report, and could lift the dollar again. British third-quarter GDP data is due later this week. A Reuters survey expects growth of 0.7 percent, an uptick from the previous period. This article is information only and is not investment advice.