Sterling hits 8-month high versus weak US dollar

London

STERLING touched an eight-month high versus the US dollar purely on the greenback's weakness in the aftermath of Federal Reserve chairman Jerome Powell's speech at Jackson Hole, which steered expectations of lower interest rates for longer.

Against the euro, the pound remained relatively steady, with most traders staying on the sidelines and not taking a clear directional view on the British currency in the thin August trading.

"It's this intermediate period when everyone is waiting to see how things develop," said Esther Maria Reichelt, a forex analyst at Commerzbank.

A renewed weakness in the British pound is not out of the woods, analysts say, as a mix of Brexit uncertainty, coronavirus fears and dismal economic data could well mean a return to a continuous decline in sterling.

British business confidence has ticked up but remains far below usual levels as the economy struggles to cope with social distancing and employers are preparing to cut jobs, a survey showed on Friday.

Prime Minister Boris Johnson will launch a public campaign next week to get Britain back to the workplace, as ministers warn working from home will make people more vulnerable to being sacked, The Telegraph newspaper reported.

Britain is trying to find a way to revive its services-based economy even if it means doing so while Covid-19 remains a threat. It said on Friday it will back three nationwide Covid-19 studies with £8.4 million (S$15.4 million) for research into understanding human immune responses to the pandemic.

The pound was last trading hands at US$1.3276, up 0.6 per cent on the day, having rallied earlier to US$1.3290, its highest since mid-December.

Versus the euro, it stood still at 89.72 pence, down 0.2 per cent on the day, but still close to the 2-1/2-month high of 89.30 pence it rose to on Thursday.

Traders were watching for the Bank of England (BOE) governor Andrew Bailey's speech at Jackson Hole later in the day.

Ms Reichelt said Mr Bailey might hint on whether the BOE might consider negative interest rates in the future or not, but otherwise the speech may be more of a non-event, she added. REUTERS