© Reuters. FILE PHOTO: British Pound Sterling and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo
By Ritvik Carvalho
LONDON (Reuters) – Sterling hit its lowest in a month against the dollar on Thursday as a pull-back in global stock markets saw a bid for safe havens such as the greenback, which weighed on risk and growth correlated currencies.
Minutes from the U.S. Federal Reserve’s latest meeting released on Wednesday showed policymakers at the central bank expect to reduce pandemic-era stimulus before the year is out.
The minutes pushed Wall Street’s main stock index down more than 1% and drove several currencies to multi-week lows against the safe-haven greenback. European markets stumbled at open and U.S. stock futures were pointing to a weaker start.
The pound was no exception to the selloff in risk assets, falling 0.5% against the dollar to its lowest since July 21.
Sterling also hit an over two-week low to the euro, down 0.3% on the day.
“It’s a perfect storm for FX markets right now. You’ve got a risk off macro dynamics, weaker commodity prices, a hawkish Fed, weaker … A lot of these dynamics suggest it will be a tricky period for FX markets,” said Viraj Patel, global FX and macro strategist at Vanda Research.
“Outside of the broader macro risk regime, I still like GBP as a currency because the Bank of England is more in line with the Fed’s hawkish policy,” Patel said, adding that the pound was still susceptible to gyrations in this particular environment.
Having also fallen on Tuesday after a jump in the dollar, the pound was little moved by inflation numbers on Wednesday, which investors believe will have little bearing on the rising trend for inflation.
UK inflation data showed a sharper slowdown than expected, though analysts said investors were focused more on the state of the labour market.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.