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

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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.

GBPUSD Daily Chart

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.”

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.