Sharjah24 – Reuters: The British pound tumbled on Thursday to a 21-month low against a buoyant U.S. dollar that also hit multi-year peaks against both the Japanese yen and euro.
At 1419 GMT, sterling was down 0.9% against the dollar at $1.2429, after earlier hitting its lowest level since July 2020 at $1.2416. GBP=D3
Against the euro, the pound was down 0.4% at 84.54 pence. EURGBP=D3
"In the face of a powerful dollar bull trend, GBP/USD has crumbled," ING analysts said in a note.
Expectations of aggressive Fed tightening this year have sent the yield on U.S. 10-year notes US10YT=RR over 50 basis points higher this month, in turn pushing the dollar index =USD to its highest level since 2002.
The Bank of England's Monetary Policy Committee looks set to lift its policy interest rate for the fourth consecutive meeting next week, although expectations for further tightening continue to be scaled back.
Money markets are currently pricing in around 150 basis points of further tightening by the end of the year, the equivalent of six 25 basis point rises. BOEWATCH
Morgan Stanley expects just two more 25 basis point rises in 2022 - in May and June - before the central bank takes a pause in response to slowing growth.
Analysts predict that a repricing of market expectations for the Bank of England base rate could weaken the pound further.
The pound has declined almost 5.5% this month, on track for its worst monthly performance since October 2016.
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