The Pound Sterling managed to beat the United States Dollar (USD) following four straight weekly declines. However, it remains to be seen if the Green
back can continue to show resilience in the much-awaited US Federal Reserve’s Jackson Hole Symposium week.It was another week of US Dollar domination. Risk-aversion remained the main underlying theme throughout the week on the back of intensifying worries over China’s economic growth and concerns that the US Federal Reserve’s could keep interestDemand for safety boded well for the safe-haven US Dollar and helped it extend its uptrend.
Midweek, the hawkish Minutes of the Fed’s July meeting showed that "most" policymakers continued to pledge to tame inflation while seeing ‘upside risks’ to it, suggesting more upcoming rate hikes. In light of these hawkish Fed bets and upbeat US economic data, the US Treasury bond yields rallied to multi-month highs, with the benchmark 10-year Treasury bond yield hitting the highest level since October 2022 above 4.25%.
Despite the UK unemployment rate jumping to a two-year high of 4.2% in the three months to June, wage growth accelerated to the strongest pace on record. Average earnings excluding bonuses rose 7.8% in the three months through June compared with a year ago, justifying the view that the central bank would have to resort to more tightening to tame inflation. Rapidly increasing wages are seen as one of the main factors behind sticky inflation. rose 6.8% in July, softening its pace from a 7.
Toward the end of the week, the US Dollar registered a correction from two-month highs against its major peers, tracking the sharp pullback in US Treasury bond yields on persistent risk-off market mood. GBP/USD, however, struggled due to a bigger-than-expected drop in UK Retail Sales. British Retail Sales were 1.2% lower than in June against expectations of a 0.5% drop.The table below shows the percentage change of Pound Sterling against listed major currencies in the last 7 days.
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