Traders bet against sterling as parity with the dollar looms closer
The TelegraphThe first week of September saw the biggest jump in bets against sterling since November last year as Liz Truss won the Tory leadership race. Antoine Bouvet, strategist at ING, said that the pound “has been trading off fiscal concerns since early August”, calling it a “perfect storm” for UK assets. “Unless something can be done to address these fiscal concerns, or the economy shows some surprisingly strong growth data, it looks like investors will continue to shun sterling.” The pound has shed almost 20pc of its value against the stronger dollar in 2022. Adam Hoyes, market economist at Capital Economics, said: “This is a pattern more often associated with emerging markets, and looks like a signal that investors are becoming more concerned about the new UK government’s approach, with fiscal and monetary policy increasingly working in opposite directions. We expect it to end the year at $1.05.” Jane Foley, currency strategist at Rabobank, said the pound’s slump has fuelled speculation that the Bank of England will forced into “huge emerging market style rate hikes to prevent further sharp losses”.