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Pound dips after risk-led recovery

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By Reuters
Pound takes breather after risk-led recovery
Pound takes breather after risk-led recovery   -   Copyright  Thomson Reuters 2021

By Ritvik Carvalho

LONDON -Britain’s pound dipped against the dollar on Thursday while still holding on to gains made on the back of a risk-led recovery this week that saw it reclaim the $1.37 level.

Sterling has traded largely in line with global risk sentiment in financial markets in recent weeks, tracking the direction of world stock markets higher or lower.

While concerns about the Delta variant of coronavirus have rattled stocks, higher commodity prices have helped put a floor under riskier, growth-correlated currencies, including the pound.

Sterling was 0.4% lower to the dollar at $1.3705 by 1714 GMT, clinging on to a gain of 1% against the greenback this week.

It was 0.3% lower against the euro at 85.75 pence.

“With no domestic factors currently driving sterling’s movements, GBP/USD has been largely following the risk recovery higher thanks to USD weakness, although EUR/GBP remains quite stuck in its recent range,” ING strategists said in a note.

If the dollar stabilises before the Federal Reserve’s annual symposium in Jackson Hole on Friday, the sterling/dollar rate could struggle to move back above the $1.3800 200-day moving average, they said.

Investors will watch the Wyoming event, attended by prominent central bankers, for further clues on potential tapering by the Fed.