British Pound Ends Bullish Recovery Streak as Risk-On Sentiment Faded

The British pound (GBP) weakened against the US dollar (USD) on Wednesday, bringing the currency’s six-day rally to an end, with sterling coming short of retesting the 1.1500 mark.

This comes as British Prime Minister Liz Truss fought to get on top of a chaotic first month in office with her speech at the Conservative party conference for the year. Prime Minister Truss beckoned conservatives to maintain a united front and channel efforts to transform the nation’s economy.

The fall recorded in the pound picked up as the dollar regained some ground against most of its counterparts, as a recently stoked risk-on sentiment died out, and Wall Street stocks fell.

British Pound Also weak Against the Euro

At the time of writing, the GBP/USD pair trades at 1.1340 after bottoming at 1.1226 earlier in the day. The euro (EUR) also stumbled against the greenback, dropping to the 0.9885 mark or 1% on Wednesday. Against the euro, the pound reversed its five-day winning streak, as the price tapped the 0.8776 mark.

Commenting on the regained dollar strength, David Madden, a market analyst at Equiti Capital, noted: “The dollar is exerting its dominance on the currency markets once again as sterling/dollar and euro/dollar are down by 1.9% and 1.3% respectively.”

The pound has recovered some ground against the dollar after falling to a multi-year low of 1.0395 on September 26 following the government’s “mini-budget” plan announcement. The single currency also recorded a notable boost after the government made a U-turn in its tax policy announcement.

Commenting on the pound’s performance, Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, noted: “Compared to the wild swings over the past week or so it’s not a significant move.”