Pound, euro continue declines against strengthening dollar
Date
1/13/2025 8:31:42 AM
(MENAFN) The pound and euro have extended their declines against a strengthening US dollar, with sterling dropping to levels last seen in autumn 2023.
The pound fell 0.76 percent to USD1.2111 amid market volatility and concerns over the UK’s economic outlook. Meanwhile, the euro slid nearly 0.6 percent to USD1.0185, marking its lowest level against the dollar since September 2022.
The dollar's rally has been driven by robust US jobs data and fading expectations for imminent interest rate cuts by the Federal Reserve.
Sterling’s decline followed a turbulent week for UK government bonds, known as gilts. A sell-off pushed gilt yields higher, reflecting investor concerns over the UK’s public finances. The yield on the UK’s 30-year bond reached its highest level since 1998 during last week’s global market turbulence.
While bond yields eased slightly on Friday, they resumed their climb this morning. Yields for US and German government bonds also rose, highlighting persistent shifts in investor sentiment amid global economic uncertainty.
The dollar’s strength is further supported by strong US labor market data, which showed continued growth in December. This final jobs report under President Joe Biden’s current administration has reduced the likelihood of near-term rate cuts by the Federal Reserve.
Similarly, expectations for interest rate cuts by the Bank of England have diminished, adding to the pound’s struggles.
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