Pound Falls as Oil Prices Rise, Dollar Gains Momentum
The pound fell on Tuesday as optimism about US-Iran negotiations faded, pushing oil prices higher and supporting the dollar. The British currency was down 0.19% at $1.3232, while the euro slipped 0.24% to $1.1344.
According to Francesco Pesole, FX strategist at ING, 'We need to see some stability in bonds for the dollar to correct lower. That relies heavily on oil, and the latest news isn’t encouraging.' He noted that 'upside risks are rising again for the greenback,' particularly with high valuations and rapidly rising interest rates.
The European Central Bank is also under scrutiny, as markets price 9 bps of ECB tightening by October. Pesole warned that a hike by the Fed in October would challenge his scenario for a higher EUR/USD by year-end, potentially extending dollar gains to 0.84-0.85.