Pound to Dollar Forecast for The Coming Week
The Pound to Dollar exchange rate hit fresh multi-decade lows last week before rising ahead of the weekend. Whether it can sustain this rise will largely rely on market reaction to U.S. inflation data, which could influence the Federal Reserve’s policy position next week.
Dollars were extensively sold against all major currencies except the Japanese Yen last week. However, the Sterling also performed better after introducing a hefty fiscal stimulus package by new U.K. Prime Minister Liz Truss.
The Pound-Dollar rate rose from a low near 1.13 to as high as 1.1651 in the week’s closing session. At the same time, the outlook is likely influenced by Tuesday’s U.S. inflation numbers and the implications for a still-hawkish Federal Reserve.
Many U.S. inflation rates have slowed in recent months. However, not nearly enough to persuade the Fed that they will fall far enough to hit the 2% inflation objective anytime soon.
Dollar Not Done Yet
A top government official said on Sunday that Japan’s government must take whatever steps are necessary to counteract the yen’s unsustainable losses after it touched its worst level versus the Dollar in 24 years.
Despite an early loss, the Dollar quickly recovered to trade at 143.24 yen, up 0.42% from the previous week’s high of 144.98.
The dollar index was at 108.770, having peaked at 110.780 last week.
The euro rose 0.43% to $1.0180, moving away from its previous low of $0.9765.
According to ANZ analysts, the Dollar has gained about 9% against the euro and the Chinese yuan in the last month, 12.2% against the British pound, and 19% against the yen.
The soaring USD puts pressure on developing countries, which find imports in USD more expensive.
The rise of the Dollar, paired with rising bond yields, has weighed on gold, trading at $1,712 per ounce after falling to a low of $1,691 last week.
Oil prices have also been falling due to a worldwide economic slowdown. At the same time, supply restrictions prompted a 4% rally on Friday.
