The British Pound Sterling, on Thursday, May 31, soared above $1.33 as the dollar fell across the board, with traders identifying little in the way of UK-specific drivers until business surveys are published in coming days.
The pound traded up 0.4 percent at $1.3334, moving away from six-month lows of $1.3205 hit on Tuesday.
A more than month-long rally by the dollar stalled on Thursday, when the euro rebounded as two anti-establishment parties in Italy made last-ditch efforts to form a government and avert snap elections.
Sterling has been hit particularly hard in the dollar’s rally, which coincided with signs of weakness in the UK economy and a sharp pullback in market forecasts for a Bank of England interest rate rise.
“The dollar is under pressure today. It’s helping other currencies. What’s happening outside of the UK is much more important,” said Manuel Oliveri, FX strategist at Credit Agricole.
Oliveri said uncertainty about the state of divorce negotiations between Britain and the European Union continued to weigh on the pound.
Credit Agricole expects an August rate hike from the BoE but that remains dependent on data.
After a shaky start to 2018 for Britain’s economy, investors will be looking at business surveys for May – beginning on Friday with manufacturing – for a sense of how it is faring in the second quarter.
Against the euro, the pound was steady at 87.82 pence per euro. The two currencies have traded in a narrow band in recent weeks as both have come under selling pressure.
