The pound sterling advanced on Tuesday thanks to an improvement in investor confidence after the appointment of Rishi Sunak as Prime Minister of Great Britainwhile the dollar fell to a three-week low after gloomy economic data in the United States.
The potential for volatility is high in the forex market this week, as central banks in the euro zone and of Canada raise interest rates by 75 basis points. It is also anticipated that the Bank of Japan keep rates ultra-low to support its fragile economy.
Rishi Sunak on Tuesday became the third Prime Minister of Great Britain in two monthswith the mission of facing an economic crisis at a time when his political party faces a turbulent period.
The pound sterling reached its highest level since September 15, and in the afternoon it traded with a rise of 1.66%, to 1,147 dollars. Still, forex experts expect the British currency to remain under pressure.
Beyond a brief honeymoon phase rebound, I think the grim road ahead for the UK economy is likely to limit sterling’s gains,” said Joe Manimbo, market analyst at Convera.
The dollar weakened across the board on signs that Federal Reserve rate hikes (fed) are holding back the world’s largest economy.
The greenback fell into negative territory after data showed US home prices sank in August as a sharp rise in mortgage rates is dampening demand.
The dollar index, which measures the price of the greenback against six peer currencies, fell 0.831% to 110.93 units.
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