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Sterling recovers some lost ground

yellen
Arron Morris Currency Broker - Sterling recovers some lost groundWritten by
Arron Morris
Senior Currency Broker
T: 01442 892 065

It has been a volatile couple of days for the GBP/USD cross. The dollar strengthened across the board yesterday afternoon after Fed Chair Janet Yellen stated the US central bank could look to raise interest rates at one of their upcoming meetings.

Her comments, along with the weaker UK inflation reading left the GBP/USD cross trading at $1.2450 this morning, while EUR/USD has dropped back to 1.0560 – the lowest we have seen the cross since the 11th January.

Things then got worse for the pound, after the Office for National Statistics released the latest Average Earnings Index figures. The reading showed wage growth had dipped from 2.8% to 2.6% in the final quarter of 2016 and caused the GBP/USD to fall to a fresh low of $1.2384. The wage figures do not make great reading for UK consumers, especially with inflation expected to rise in the coming months.

GBP/USD graph

GBP/USD exchange rate graph

However, the pound has been able to fight back over the course of the afternoon. Following some upbeat economic data from the US, investors have started to bank their profits and with Fed Chair Janet Yellen offering very little on the timing of future rate hikes during the second day of her testimony in Washington, the dollar has started to weaken and allowed the GBP/USD cross to rise back towards $1.2450.

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Arron Morris
Senior Currency Broker
T: 01442 892 065

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