Published: 12/07/2023 By ECAPSterling continues to rally as Britain's economy is so far proving resilient to the jump in interest rates. The UK’s solid employment report indicated that the BoE will likely raise interest rates further, thus, fuelling the British pound’s recent jump and lending further support against its peers.
The Euro reached its highest level against the US Dollar since May 8th. This follows recent German consumer inflation figures which confirmed the rebound in June after three months of moderation. The data reinforces the likelihood of additional interest rate hikes by the ECB, which, in turn, is seen as another factor acting as a tailwind for the shared currency.
The Dollar extended recent losses as markets await more signals on where US interest rates will peak after comments from Fed officials suggested that the central bank was close to reaching peak interest rates in its current rate hike cycle. This sparked sharp capital flows from the dollar and into more risk-driven currencies – like the British pound and the Euro – amid bets that the greenback had run its course.