Sterling extended its fall against the U.S. dollar on Friday, dropping below $1.39, hurt by the U.S. Federal Reserve’s hawkish surprise while data also showed an unexpected fall in Britain’s retail sales.
The pound dropped against a strengthening dollar on Thursday after the Fed surprised markets by signalling it would raise interest rates and end emergency bond-buying sooner than expected.
On Friday, it fell further against both dollar and euro. At 0747 GMT it was down 0.4% on the day $1.3871, having touched as low as $1.38555 - its weakest since May 4. It was on track for its worst week since September 2020.
British retail sales fell 1.4% between April and May as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops. The data did not have clear impact on the pound.
Elsewhere, investors are watching a dispute between Britain and European Union over post-Brexit trade in the British province of Northern Ireland, which has a land border with EU member Ireland.
Dollar eyes stellar week as Fed sends bears scurrying
The dollar was headed for its best week in nearly nine months on Friday as investors scrambled to price in a sooner-than-expected ending to extraordinary U.S. monetary stimulus in the days after a surprise shift in tone from the Federal Reserve.
Since Wednesday, when Fed officials projected possible rate hikes in 2023, the greenback has surged some 1.8% on the euro and more than 2% against the Australian dollar and the negative-yielding franc as short-sellers have rushed to close positions.
The dollar index has zoomed above its 200-day moving average, hitting a more than two-month high of 92.010, and is on track for a 1.6% weekly gain, its largest since last September.
The dollar is also on track for a 0.5% rise against the yen. The yen sat at 110.25 per dollar after hitting an 11-week low of 110.82 on Thursday and was little moved by the Bank of Japan keeping its main policy settings steady, as expected.
LME copper eyes biggest weekly drop in 15 mths on China sale plan, dollar
London copper prices were set on Friday for their biggest weekly fall since March 2020 as the dollar firmed on the prospect of U.S. interest rate hikes and after China announced a plan to sell part of its reserves of the metal.
Three-month copper on the London Metal Exchange was down 0.8% at $9,242.50 a tonne by 0710 GMT, pushing its loss for the week to 7.6% and putting it on track for its steepest weekly fall since March last year, when the coronavirus hit demand.
The most traded July copper contract on the Shanghai Futures Exchange dropped to 66,960 yuan ($10,394) a tonne, its lowest since April 15, before paring some losses to close at 67,260 yuan a tonne, still down 2.6%.
The dollar was headed for its biggest weekly gain in nearly nine months as investors scrambled to price in a sooner-than-expected ending to extraordinary U.S. monetary stimulus in the days after a surprise shift in tone from the Federal Reserve.
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