Sterling Recovers For Now; Dollar Bulls Take Breather

By Peter Nurse - The British pound edged higher Tuesday, rebounding to a degree after falling to a record low against the U.S. dollar as traders paused for breath after a couple of volatile sessions.

GBP/USD rose 0.9% to 1.0783, bouncing after falling to an all-time low of 1.0327 on Monday, helped by Bank of England Governor Andrew Bailey attempting to soothe markets by stating that the bank will raise rates as much as necessary at its next meeting.

Sterling’s weakness followed new U.K. finance minister Kwasi Kwarteng unveiling on Friday the country’s biggest package of tax cuts in 50 years, likely funded by a massive increase in borrowing even with the country facing slowing growth and twin deficits.

That said, it’s debatable how much higher the pound can go from here, with Bailey effectively ruling out an emergency rate hike for now.

“A U-turn on fiscal policy looks highly unlikely just a few days after the new UK government unveiled its set of tax cuts and policy liberalisation,” said analysts at ING, in a note. “As the guardians of price stability, a few are saying that the Bank of England should jump in with a large inter-meeting right hike. We think that the BoE is too psychologically scarred from the events of 1992 to try defensive FX-related rate hikes.”

Additionally, the Federal Reserve doesn’t look like pulling back from its aggressive stance on combating inflation any time soon.

Cleveland Fed President Loretta Mester said on Monday the U.S. central bank should lift rates higher and keep policy restrictive for some time, adding if there is an error to be made, better that the Fed do too much than to do too little.

At 02:50 ET (06:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.5% to 113.500, not far removed from 114.58 reached on Monday, its strongest level since May 2002.

There are a number of speeches by central bank officials this week, with the Fed's Charles Evans speaking later this session. Also, expectations are for a small lift to 104.5 from 103.2 in the U.S. Conference Board consumer confidence later in the day, while durable goods orders are set to fall 0.4% on the month in August.

EUR/USD rose 0.5% to 0.9650, bouncing from Monday’s 20-year low, helped by European Central Bank president Christine Lagarde stating that the central bank is expected to raise interest rates further over its "next several meetings" in a bid to tamp down soaring inflation.

USD/JPY fell 0.4% to 144.25, risk-sensitive AUD/USD rose 0.7% to 0.6501, while USD/CNY rose 0.1% to 7.1552, trading just below a two-year high of 7.1699 after data showed Chinese industrial profits fell for a second consecutive month in August, amid continued disruptions from COVID-related lockdowns.

USD/HUF fell 0.6% to 421.90 ahead of the latest meeting of Hungary’s central bank, which is expected to result in the raising of its benchmark interest rate by a full percentage point to 12.75%, a new European Union high.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    EC2A 2BN
    United Kingdom

    T:  + 44 ( 0 ) 203 857 2000
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    United Arab Emirates
    T: + 00 971 44 22 888

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: