Sterling was up 0.1% on the day at $1.27025, but still headed for a fourth weekly decline, having dropped around 1% so far this week, marking its longest stretch of weekly losses in almost a year
The British pound edged up on Thursday, but stayed close to this week’s one-month lows against the dollar, as a sense of stability returned to markets after an intensely volatile start to the week.
Sterling was up 0.1% on the day at $1.27025, but still headed for a fourth weekly decline, having dropped around 1% so far this week, marking its longest stretch of weekly losses in almost a year.
The euro, which reached its highest level against the pound since late April on Thursday, was 0.1% higher at 86.15 pence.
The Bank of England’s decision to reduce interest rates last week dented the pound.
But since then, concern about a hard landing for the U.S. economy, among other factors, has sparked a selloff in risk assets, sweeping sterling down along with other markets.
On Thursday, however, the dollar side of the currency pair was under more pressure.
Traders are currently pricing in a full percentage point in Fed rate cuts this year, compared with nearly 45 basis points for the Bank of England, which in theory gives the pound an advantage.
Sterling is only down nearly 0.2% this year, still the best performance from a major currency against the dollar, compared with a 1% drop in the euro or the 6.4% decline in the Norwegian crown, the worst performer.
That said, with the Bank of England now in rate-cutting mode and risk appetite looking fragile, sterling could struggle to make further headway, according to Chris Beauchamp, a market strategist at IG.
After being knocked back from its gains yesterday, the price has moved higher, he added.
