The Pound is gaining ground as traders look to the BoE for a response

Asian Trade TVSeptember 27, 2022

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SYDNEY, Sterling bounced Tuesday but was largely driven by hope, profit taking, and soaring British yields. This left traders unnerved about what the wider fallout of its record-breaking dive.

The pound gained 1% in Asia, rising to $1.0805 from Monday’s low of $1.0327. This is nearly 5% more than Monday’s low. The Kiwi also rose by 1%. This is its first gain in seven sessions. The euro rose 0.5%, and the Aussie rose 1.7%.

Related: The pound’s plunge is in the most recent gloomy sign as stocks fall

However, little has changed since Sterling’s plunge. This was triggered by concerns about Britain’s reliance on unfunded tax cuts in order to spur growth.

The Bank of England made an innocuous promise to monitor the markets and raise if necessary. At a panel event at 1100 GMT, attention will be focused on Huw Pill, the central bank’s chief economic economist.

Sterling’s rise has reduced most of Monday’s losses. But Qi Gao from Scotiabank Singapore, a currency strategist, said that it may be “short-lived.” Despite a stronger dollar, it is still 20% lower this year.

Gao stated that “More BoE rate increases could only temporarily boost the pound, but not on an ongoing basis.”

As expectations for U.S. rates remaining higher for longer and sudden moves such as the pound’s rattle trader, the greenback has risen. The dollar rose to new heights on the euro on Monday as the pound fell.

The U.S. The U.S. dollar index measures the greenback against six majors and hit a high of 114.58 in 20 years. It was at 113.51 Tuesday.

“Everyone has this hope that the dollar will peak and peak and peak, but it’s just too early,” stated Paul Mackel, global head for FX research at HSBC Hong Kong.

“The Fed is strongly hawkish, global growth is slowing, and when you combine those forces with higher risk aversion elements it all points to a strong dollar, if not strengthening dollar.”

Japan intervened last week to help the battered Japanese yen. This was enough to prevent steeper losses.

The yen was last trading at 144.41 dollars, steady despite the fact that the Bank of Japan continued to buy unscheduled bonds in order to maintain a lid on yields. [JP/]

The euro fell to $0.9528, a low in two decades. It is now being weighed down by the energy crisis and increased risks of war with Ukraine. At $0.9651, it was less than a cent higher than that.

Related: Schneider, a French company, will buy the last remaining Aveva shares for 31 pounds per share.

On Monday, the Aussie and Kiwi hit two-1/2 year lows. They are due to rebound with the Aussie rising 0.6% to $0.6500 and then the kiwi increasing 1.2% to $0.5703. [AUD/]

China’s currency yuan was also at a 2-1/2-year low on Monday, and was generally steady at 7.1589 Tuesday.

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Prices for currency bids at 0604 GMT

Description RIC U.S. Close Pct. Change YTD High Bid Low Bid

Changes in the past

Session

Euro/Dollar

$0.9658 $0.9609 +0.52% +0.00% +0.9658 +0.9584

Dollar/Yen

144.3250 144.7000 -0.23% +0.00% +144.7050 +144.3600

Euro/Yen

139.39 139.07 +0.23% +0.00% +139.4400 +138.7100