Dollar firms as pound maintains strong gains
After soaring to a ten-week high last week, sterling has inched to its highest point since the outcome of Britain's Brexit referendum to trade at $1.43 against the greenback – only the second time it has reached that point since the vote.
This follows a particularly strong finish last week, when sterling edged up to $1.429. Expectations of an imminent interest rate rise from the Bank of England have been a major driver of sterlings gains in the last week.
Meanwhile the US dollar has stabilised today, hovering near a two-month high against the yen, after the market gained some clarity following military strikes on Syria by the US, the Uk and France over the weekend.
“Whilst the dollar has remained relatively stable as it started trading for the new week, flows into the Japanese yen, the traditional safe haven currency have increased,” said Jasper Lawler, head of research at London Capital Group. “The USD/JPY has fallen steadily across the Asian session and is looking to target 107 in the near term.”
The euro was nearly flat at $1.23 after closing Friday nearly unchanged. The Australian dollar was flat at $0.78, while the New Zealand dollar dipped 0.05 per cent to $0.73.
Read more: Dollar tumbles as pound hits two-week high
The stability of currencies despite geopolitical uncertainty suggests a relative indifference in the foreign exchange market, according to the latest analysis by JP Morgan: “FX markets have been seeming indifferent to a lot recently, with most major pairs confined to sideways ranges despite the exceptionally large deluge of geopolitical and trade war risk headlines in the past two months. This indifference has seemingly also extended to run of downward surprises and revisions in the global cyclical outlook over the past two months.”