Sterling soars to 19-week high against the US dollar

The pound gained over 0.8% against the US dollar in Wednesday's session

The pound gained 0.8% against the US dollar yesterday, reaching levels not seen since August 2023 amid general dollar weakness and a lack of positive economic data.

The euro is also on good footing. It’s on track to end 2023 nearly 3% higher against the US dollar since this time last year, based on expectations that the Federal Reserve will begin to cut interest rates earlier than the European Central Bank in early 2024.

Markets are currently placing bets on six rate cuts by the Federal Reserve next year and investors have priced in the first cut for March.

Yesterday we heard The New York Times (NYT) has sued OpenAI and Microsoft over the use of its content to train generative artificial intelligence and language model systems. There has been speculation that the NYT could receive billions of dollars in damages for breaching copyright infringement laws.

Chancellor, Jeremy Hunt announced expectations for the spring budget to feature a host of tax cuts which will be held on 6 March. This fuelled market speculation for an early general election in spring 2024.

The economic data docket is relatively thin this week, especially for the UK, however, US investors will receive figures for initial jobless claims for December later today. Markets expect a slight increase from 205k to 210k new jobless benefit seekers.

Tomorrow morning, we’ll gain insight into UK house prices for October.

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GBP: Pound rallied on Wednesday

Yesterday, the pound soared to a 19-week high against the US dollar and is currently over 6% higher from its 2023 low in March.

GBP/USD: the past year

 

EUR: Hopes for further dollar weakness

There is little data expected for the euro area this week, therefore the euro’s movement will be determined by its major rivals the pound and US dollar.

 

USD: Spotlight on jobless claims

The US dollar lost 0.8% and 0.5% against the pound and euro, respectively, in Wednesday’s session. All eyes rest on the initial jobless claims figures which investors hope will boost the dollar.

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