Pound and Euro Rise as Dollar Softens After Yen Shock

The pound and euro both gained ground on Thursday as the dollar softened in response to a sharp overnight slide in USD/JPY. The sterling rose by 0.09% to $1.3499, while the euro increased by 0.18% to $1.1609.

Francesco Pesole, FX strategist at ING, noted that the move was largely driven by broad dollar weakness tied to the yen shock rather than any UK-specific fundamentals. He attributed the gain to a stalling oil rally and lower Fed rate-hike pricing for September, which eased slightly from 18 basis points to 15bp.

Pesole also pointed out that ING retains a preference for the upside in the dollar, as front-end rates and higher energy prices both point up. However, he warned of renewed Treasury interventionism and a revamp of the so-called debasement trade if back-end yields rise further.