On Thursday, the pound sterling rose against the dollar, while the euro remained stable. Pressure on the US currency came from the sell-off of US technology stocks.
On Thursday, the pound sterling rose slightly against the US dollar, while the euro generally remained stable. At 12:17 Moscow time, the British currency added 0.10% and reached 1.3406 dollars, and the euro rose 0.02% to 1.1235 dollars.
The main reason for moderate pressure on the dollar was the reduction of positions in overcrowded US technology stocks. This caused a small flow of capital into European currencies. ING Head of Market Strategy Chris Turner noted that the market is now determining the scale of the reduction of concentrated positions in tech stocks and the dollar. According to him, until the US yield curve begins to decline steadily, it is difficult to talk about a broad weakening of the dollar.
Last week, Federal Reserve Chairman Kevin Warsh emphasized the priority of price stability, but did not give clear signals on rates ahead of the Fed meeting on October 27–28. Markets mostly expect rates to remain unchanged. Traders are watching PMI index data and jobless claims due out on Friday.
The pound's rise primarily reflects dollar weakness rather than domestic UK factors. High inflation data released in the country on Wednesday support expectations of a Bank of England rate hike in November. Attention remains focused on the budget to be presented next week.
The euro received some support despite budgetary uncertainty in France and high energy prices. ECB officials are not commenting on the situation ahead of the October 29 meeting, where rates are also likely to remain unchanged.
ING believes that the EUR/USD pair will remain in a limited range. A move to the 1.1340–1.1350 level within a month will require a breakout of resistance at 1.1270–1.1275. The monthly target for EUR/USD is maintained at 1.1300.