Sterling traded lower against a firmer dollar as markets awaited a Federal Reserve decision and the UK budget. ING says easing fears of an AI-driven equity sell-off let traders refocus on dollar-supportive themes.
Sterling fell 0.18% against the dollar to $1.3283 as of 06:17 ET (10:17 GMT) on Wednesday. A firmer dollar and caution before a Federal Reserve decision weighed on European currencies.
Dollar regains focus as AI fears ebb
Receding fears of an AI-driven equity sell-off let markets refocus on dollar-supportive themes after strong third-quarter results from SK Hynix. Nasdaq futures were up 0.6%.
The dollar index was edging back toward its yearly highs, around 102.35 per HSBC data. Chris Turner, global head of markets at ING, said "a move through 102.50 opens up 103.00".
Fed decision and UK budget loom
The Fed concludes its policy meeting later on Wednesday. ING expects the focus on restoring monetary stability to keep the message leaning hawkish and the dollar supported.
The UK budget is due later the same day, but ING does not expect it to have too much say on the Bank of England's tightening prospects. A surprise on minimum wage adjustments could ripple through money markets.
ING rates strategist Michiel Tukker estimates a 20 basis point risk premium in 10-year gilt yields, some of which could unwind. A LSEG consensus cited by HSBC sees GBP/USD at 1.33 by end-2026.
Source: Investing.com
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