SINGAPORE, May 8 Reuters The dollar began the week under pressure on Monday, with traders betting it might have peaked along with U.S. interest rates while keeping a wary eye on looming inflation and loans data.

Sterling , up a fraction on the day and hovering at an 11month high of 1.2652, was in particular focus ahead of an expected Bank of England rate increase on Thursday.

The pound has also been firming versus the euro, which was last at 87.36 pence , having dipped to 87.11 pence on Friday, its softest against the British currency this year.

Against the dollar, however, the euro has rallied nearly 16 from September lows, and was up 0.25 to 1.1047, supported by expectations the European Central Bank will keep interest rates high for longer than the U.S. Federal Reserve.

Last week the Fed raised rates by 25 basis points but sounded slightly more cautious than peers on the outlook, dropping guidance about the need for future hikes.

U.S. interest rate futures are pricing about a onethird chance of a rate cut as soon as July, according to the CME FedWatch tool even though strongerthanforecast U.S. jobs data released on Friday suggests that might be premature.

The ECB last week also slowed the pace of its interest rate increases but signalled more tightening to come.

Interest rate differentials between the Eurozone and US continue to narrow, removing a headwind for the euro vs the dollar, said Carol Kong, currency strategist at Commonwealth Bank of Australia.

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