The dollar, a safe haven, was up markedly against the British pound on Friday, benefiting from fears about the global economy and the determined tone of the American Federal Reserve (Fed) in the face of inflation.
Around 11:25 a.m. GMT (1:25 p.m. in Paris), the greenback gained 1.01% against the British pound at 1.2056 dollars for one pound. The Dollar index, which compares the American currency to other major currencies, reached 105.00 points, gaining 0.30%. The fear of a recession in the United States is again on the front of the stage.
US household spending slowed in May on record inflation and incomes not rising enough to offset it, according to Commerce Department data released Thursday. This slowdown could, however, satisfy the American central bank (Fed), which since March has been aggressively raising its key rates, precisely to temper demand, and therefore the pressure on prices.
Jerome Powell, the chairman of the Fed, has already said that the institution intends to raise its rates further by the end of the year. “The war in Ukraine, the surge in energy prices, the significant tightening of monetary conditions and the appearance of fears of a global recession are all factors that have caused widespread stress on the financial markets”, lists Guillaume Dejean, analyst for Western Union. So many reasons to turn to assets considered safe havens, such as the US dollar.
The dollar is benefiting from the much more determined tone of the Fed when the Bank of England seems less aggressive in its fight against rising prices. At the same time, “concerns persist about the weakness of the British economy,” Hargreaves Lansdown analyst Susannah Streeter told AFP. “This means that the Bank of England (BoE) could proceed with more gradual rate hikes, while the Federal Reserve should adopt a more aggressive monetary policy stance, which pushes the dollar higher against the pound. “, explains the analyst. With rising energy costs, UK activity slowing to its lowest since winter 2021 lockdown, ‘growing Brexit concerns are just the icing on the cake’, adds Ipek Ozkardeskaya, an analyst at Swissquote interviewed by AFP.
The dollar, a safe haven, was up markedly on Friday against the British pound, taking advantage of fears about the global economy and the determined tone of the American Federal Reserve (Fed) in the face of inflation. ), the greenback gained 1.01% against the British pound at 1.2056 dollars for one pound. The Dollar index, which compares the currency…