The pound steadied against the dollar after fluctuating in recent weeks, while the dollar regained some ground. UK government borrowing exceeded expectations last month, presenting a potential challenge for Chancellor Rachel Reeves’ upcoming spring statement. Meanwhile, the dollar’s recent volatility stems from President Trump’s unpredictable trade and tariff policies.
Table Content:
Sterling Holds Steady Above $1.29
On Friday, the pound traded above $1.29, having reached a four-month high of $1.30 earlier in the week. The dollar index, which measures the greenback against a basket of currencies, saw a slight uptick.
“The US dollar continues its recovery from oversold levels,” observed David Morrison, senior market analyst at Trade Nation, a Financial Conduct Authority-regulated fintech and financial services provider. “The Dollar Index is approaching 104.00, and the key question is whether it can retest and surpass the resistance level just below 105.00 in the coming weeks. Failure to do so could signal a return of bearish dollar sentiment.”
Central bank decisions are also influencing currency markets. Both the US Federal Reserve and the Bank of England maintained interest rates this week. However, markets anticipate two further rate cuts by the Fed this year. The pound also weakened against the euro, declining by 0.1% to trade around 1.19.
Gold Prices Retreat from Record Highs
Gold futures hovered just below $3,042 per ounce on Friday, retreating from recent highs. The stronger dollar and profit-taking following Thursday’s all-time high of $3,057 contributed to the price decline. A stronger dollar increases the cost of gold for international buyers. Spot gold prices also dipped 0.3% to $3,035 by midday in London.
Oil Prices Ease from Three-Week Highs
Oil prices retreated from three-week highs on Friday, amidst ongoing concerns surrounding Iran-related sanctions. Brent crude fell 0.2% to around $71.30 per barrel, while West Texas Intermediate declined 0.1% to $68 per barrel. Earlier in the week, US government data revealed a larger-than-anticipated decrease in distillate inventories, including diesel and heating oil, which dropped by 2.8 million barrels.
“The US oil demand outlook remains positive despite lower air travel passenger volumes,” stated analysts at JPMorgan in a research note. They argued that reduced air travel in the US does not necessarily indicate broader weakness in demand. According to JPMorgan, global oil demand averaged 101.8 million barrels per day (bpd), representing a year-on-year increase of 1.5 million bpd.
Conclusion: Market Uncertainty Persists
Market volatility continues as investors weigh various factors, including fluctuating currency values, central bank policies, and geopolitical tensions. The pound and dollar have stabilized for the moment, but their future trajectory remains uncertain. Meanwhile, gold and oil prices have retreated from recent highs, suggesting potential profit-taking and a cautious outlook. Investors should closely monitor these developments and adjust their portfolios accordingly.
