GBP / USD breaks below 1.3800 and hits new monthly lows at 1.3776

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  • The US dollar is firmly on the rise due to inflation concerns.
  • Initial jobless claims in the US fall for the second week in a row, to 290,000.
  • GBP / USD: Will end the year around 1.3800 – Scotiabank.

The GBP extends its decline below 1.3800 during the American session, losing 0.26%, trading at 1.3788 at the time of writing. As shown by the US stock indices rising between 0.19% and 0.58%, the market sentiment has improved slightly, with the exception of the Dow Jones Industrial, which has fallen 0.12%.

DXY recovers from early week losses

The US Dollar Index, which measures the dollar’s performance against a basket of six pairs, is up 0.17% firmly, currently at 93,722, driven by rising US Treasury yields, which are recovered from expectations that high inflation in the country could The Federal Reserve will react, raising interest rates, sooner rather than later.

Meanwhile, the 10-year US Treasury yield is up four basis points, standing at 1,677% at press time.

On the macroeconomic front, in the UK, September’s public sector net debt of £ 21.014 billion was less than the expected £ 27.152 billion.

On the US economic record, the US data was mixed. Weekly jobless claims have fallen to their lowest levels in 19 months and existing home sales rose 7.0% to 6.29 million in September, the highest reading since January. By contrast, the Philadelphia Fed manufacturing survey fell to 23.8 from 30.7 in the previous month.

GBP / USD: Will end the year around 1.3800 – Scotiabank

Scotiabank’s currency analysis team expect the pair to end the year around 1.3800:

“The British pound remains well supported by the tough expectations of the Bank of England which should avoid sustained declines below 1.36, but we believe there is likely to be more risk to the downside than to the upside to the Bank’s tightening market expectations. from England, as they are already trading more than 100 bps in increases between now and the end of 2022. “

“We believe that GBP / USD will struggle to move towards a 1.40 test despite the high probability of at least one rally shortly and we believe that the pound is more likely to close the year near the 1.38 level.”

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