Caution over the pound as the sell-off continues and it falls below 1.1 to the dollar

Caution over the pound as the sell-off continues and it falls below 1.1 dollars per pound

26.09.2022

Last weekend, the U.S. dollar continued to strengthen as the Dollar Index rose to 113.9, causing the EUR/USD pair to fall 180 pips from 0.9850 to 0.9667.The EUR/USD pair continued to decline during today’s Asian session, touching 0.9552. The string of new lows shows no signs of stopping. Despite comments from German Bundesbank President Nagel that “the ECB needs to raise rates again even if it harms economic growth,” the pair has been unable to withstand the strength of the U.S. dollar.

Among European currencies, the pound plummeted against both the yen and the U.S. dollar.Following the announcement of the Truss administration’s major tax cut plan last weekend, the yield on 10-year UK government bonds rose to 3.8%. The pound fell against the dollar from 1.1271 to 1.0836. Furthermore, during Asian trading hours today, it plummeted by 500 pips, touching 1.0304. Parity—one pound to one dollar—is now looking increasingly likely.

Today’s schedule includes the Turkish Economic Sentiment Index at 4:00 PM, remarks by Nagel, President of the German Bundesbank, at 5:00 PM, the German IFO Business Climate Index at 9:30 PM, the Chicago Fed National Activity Index at 10:00 PM, remarks by Lagarde, President of the ECB, at 11:00 PM, and remarks by Collins:Boston Fed President remarks, at 11:30 PM the U.S. Dallas Fed Manufacturing Activity Index, at 1:00 AM UK MPC member Tenreiro remarks, U.S. Bostic: Atlanta Fed President remarks, at 1:30 AM U.S. Logan:Dallas Fed President remarks, 2:00 AM: US 2-year Treasury auction, 3:35 AM: NZ RBNZ Governor O'Hara remarks, and 5:00 AM: US Cleveland Fed President Mester remarks are scheduled. With the sell-off in the pound showing no signs of stopping, we will be paying close attention to the remarks by UK MPC member Tenreiro.