The pound sterling fell to a near nine-month low against the dollar on Thursday, hurt by the relentless rise of the US currency amid expectations of dollar-friendly policies from future President Donald Trump
The pound lost 0.82% on the day to $1.2422, its lowest level since April 2024, a decline that accelerated after breaking through resistance around $1.2475.
The euro also fell, hitting a more than two-year low, and the Japanese yen and most other currencies were weaker than the dollar, although to a lesser extent than the pound sterling. [FRX/]
Trump's policies are widely expected to not only boost growth but also add to upward pressure on prices. This will lead the Fed to be cautious about cutting rates, which will support U.S. Treasury yields and boost demand for dollars.
The pound's larger fall is a reversal of last year's trend, when it depreciated less against the dollar than all other G10 currencies. Stagnant inflation and better growth at the start of the year allowed the Bank of England to be more cautious than its counterparts in cutting rates.
That may not be the case this year.
“Late last year, UK data indicated a larger-than-expected slowdown in the UK economy, leading to further pessimism about the economic outlook and triggering a sell-off in the pound , which kind of calmed down over the holiday season,” said Lee Hardman, senior currency analyst at MUFG.
“If the UK economy continued to weaken at the start of the year and the Bank of England started talking about more active interest rate cuts in response to this situation, this could certainly pave the way to a fall in the pound,” he said.
“Although in due course the Bank of England has given little indication that it is willing to move away from its gradual approach to rate cuts.”
Against the euro, the pound weakened slightly. The euro was up 0.3% at 83.09 pence.
Late last year, the euro threatened to weaken to its lowest level against the pound since June 2016 and the day after Britain voted to leave the European Union. , although it has recovered slightly since then.
