Dol­lar takes a pound­ing as sterling hits Jan­uary lev­els

The Daily Telegraph - Business - - Business - By Louis Ash­worth

THE pound has bounced back to prepan­demic lev­els against the dol­lar as in­vestors bet that the worst of the Covid cri­sis has passed in Europe.

Sterling rose as high as $1.3267 on a fifth day of gains, lift­ing it above its Jan­uary level for the first time, be­fore slip­ping back later in the day. The rally has been driven by a fall in the dol­lar as in­vestors move their cash out of safe haven US as­sets.

It caps off a re­mark­able turn­around af­ter the pound hit a 35-year low of $1.1450 in March. Last night it was trad­ing a lit­tle over $1.31.

Ranko Berich of Monex Europe said the rise in sterling should not be seen as a vote of con­fi­dence in Bri­tain, and that Brexit jit­ters are still likely to have an ef­fect.

Septem­ber’s Fed­eral Re­serve meet­ing will be cru­cial to the US cur­rency’s for­tunes, with low in­ter­est rates and money print­ing putting the dol­lar un­der pres­sure as Amer­ica strug­gles to bring out­breaks of Covid in Texas, Florida and Cal­i­for­nia un­der con­trol.

Bloomberg’s dol­lar spot in­dex – a mea­sure of the green­back’s per­for­mance against a bas­ket of other currencies – hit a two-year low on Tues­day.

The pound has re­cov­ered about 16pc from its mid-March trough, but at a slower pace than other currencies.

Sev­eral ma­jor continenta­l currencies are up more than 6pc this year against the dol­lar, with March’s mar­ket tu­mult rep­re­sent­ing lit­tle more than a blip for the euro af­ter in­vestors cheered un­prece­dented joint bor­row­ing plans.

Strate­gists at Dutch lender ING said that the pound’s strength has partly been driven by less of a fo­cus on Brexit as in­vestors pay more at­ten­tion to coron­avirus. But they warned this sit­u­a­tion could change as ne­go­ti­a­tions ap­proach a cli­max, with cur­rent trad­ing rules due to end in De­cem­ber.

The dol­lar has fallen against sterling and a bas­ket of other currencies, partly due to US fail­ure to con­tain Covid

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