Sterling lost ground against the dollar, slipping 0.1% to $1.2966, on Wednesday as the greenback rallied overnight amid strong economic data and investors shortened the odds of a second Trump administration.
The dollar index (DX-Y.NYB) — which measures the US currency against six other major currencies — rose to 104.34, the highest since early August.
However, the pound could make a comeback this session as Bank of England governor Andrew Bailey is set to speak again. Bailey did not give any hints towards the path of interest rates on Tuesday when he spoke at an event in New York but traders will be on the lookout again to any signs on what Threadneedle Street will do next.
An aggressive interest rate cut — as expected by most — would boost the pound as it is seen as a safe alternative to lower rates. But if the governor adopts a more dovish tone and doesn’t push back against market expectations the pound could lose even more ground this session.
Against the euro (GBPEUR=X), sterling was muted, trading at €1.2022.
Gold prices climbed on Wednesday for yet another consecutive day as Middle East tensions and the upcoming US election spurred demand for the safe haven asset.
Spot gold was trading at $2,756.70 per ounce — a fresh all-time peak — while US gold futures inched up 0.4% to $2,769.70, at the time of writing.
“Gold has scaled new highs despite real and nominal yields edging higher, the dollar strengthening and US equity markets scaling new highs,” Standard Chartered said in a note.
“Gold’s ability to latch on to coat tails that take prices higher irrespective of the macro backdrop suggests that the market continues to see positive underlying flows.”
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Political uncertainty around the US election continued to drive flows towards the safe-haven precious metal. The expected interest rate cuts by major central banks is another factor benefiting the non-yielding yellow metal.
“Both presidential candidates are proposing inflationary policies, which will be very supportive for gold. While some of this is priced in, it will also provide ongoing support for higher prices,” Michael Langford, chief investment officer at Scorpion Minerals, told Reuters.
Crude oil prices edged lower on Wednesday as data showed that US crude inventories increased by more than initial expected.
Brent crude futures slipped 0.6% to $75.56 a barrel, while US West Texas Intermediate (WTI) (CL=F) crude lost 0.8% to $71.20 per barrel during early European trading.