Pound slips as dollar dominance returns
As the dollar flexes, the pound wavers at 1.26, yet resilient sterling offers alternative expressions for bullish investors.
The dollar's bounce-back is making the British pound slip under the 1.26 mark, increasing the chances of it dropping further with not much support until 1.25 and 1.2470s.
In the U.S., things are looking just right - a slight miss in JOLTS is overshadowed by the better-than-expected ISM services PMI data. This makes the market keep betting on rate cuts without worrying about a recession. Currently, there's a 17 basis points expectation of easing by March according to FEDWATCH.
Even though the dollar is asserting its strength against the pound (GBP/USD), the upcoming non-farm payroll report might prevent the pound from falling too much until the release. So, despite the dollar gaining strength, all could quickly change if the job numbers disappoint.
Although the pound has stepped back from recent highs, it's standing strong against other currencies, like the euro (EUR/GBP). This makes a lower euro to pound ratio a possibly better option for those cheering on the pound.
