Sterling traded narrowly higher against the dollar on Friday as a global bond sell-off reinforced a broader risk-off mood that kept the greenback supported across major pairs. GBP/USD rose to 1.3233 while EUR/USD gained ground to 1.1392, with sterling's move driven entirely by global risk appetite rather than domestic factors.
GBP/USD rose 0.09% to 1.3233 as of 05:00 ET, according to Investing.com. EUR/USD gained 0.12% to 1.1392 over the same window. Rising back-end yields shifted global risk sentiment, letting the dollar consolidate recent gains even as its valuations start to look stretched against short-term fundamentals, according to ING.
Oil and Middle East tension underpin the dollar
Oil prices stayed elevated after the UN General Assembly summit failed to produce optimism over a Gulf resolution. A brief correction on reports of US-Iran talks to reopen the Strait of Hormuz was fully retraced within hours, pointing to deep market scepticism over any imminent de-escalation.
According to ING: "We remain cautious about calling the end of this USD rally," said Francesco Pesole, FX strategist at the bank, adding the desk may see Brent near $110 a barrel before month-end, with the dollar finding fresh support from the energy story.
Markets also continued to price an aggressive Federal Reserve tightening path. The 2-year SOFR rate climbed nearly 20 basis points over 48 hours. Pricing for an October hike reached 18 basis points, with two full hikes priced in by January and nearly four by July 2027.
Sterling's move was not UK-driven
No material domestic economic or political catalysts were in play for the pound on Friday. Instead, sterling's direction was dictated entirely by global risk appetite and the energy market dynamic underpinning dollar demand broadly.
The euro faced its own headwinds. French 10-year yields traded 110 basis points above German bunds, and political uncertainty over the French budget persisted despite reports that Marine Le Pen may back the proposal.
Eurozone economic resilience, with the Ifo index mirroring strong PMIs, is being partly offset as a euro-positive factor by wider regional spreads, Pesole said, calling it a narrative unlikely to help the currency in the current environment.
ING identifies 1.1320-1.1330 as the next key support for EUR/USD, a level that could be tested quickly on another oil surge or a US data upside surprise. The bank does not see new lows as imminent but says downside risks persist, and a convincing break below 1.1320 would deepen its bearish near-term view.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
