With the dollar’s decline, sterling rose by one percent in Asia to $1.0805 and rose nearly five percent from yesterday’s low of $1.0327. The euro rose 0.5 percent and the Australian dollar rose 0.7 percent.
The Bank of England has made a somewhat soothing promise to monitor markets and raise rates if necessary, and attention will be focused on the appearance of the Bank of England’s chief economist, Howe Bell, at the MPC meeting at 1100 GMT.
The rise of the pound trimmed most of yesterday’s losses, but Kee Zhao, currency analyst at Scotia Bank in Singapore, said it could be “short-lived”. Sterling is still down 20 percent this year on the back of a stronger dollar.
The dollar rose with the consolidation of expectations that US interest rates would remain elevated for a longer period, and with sudden moves such as the pound traders. With the pound dropping yesterday, the dollar jumped to new highs against the euro and many other currencies.
The dollar, which measures the greenback against a basket of six major currencies, hit a 20-year high at 114.58 and fell from that at 113.51 on Tuesday.
Japan intervened to support the collapsing yen for the first time in decades last week, which was enough to avert further losses for the yen for the time being.
The yen was last traded at 144.41 per dollar, steady even as the Bank of Japan pumped more cash into buying non-scheduled bonds to keep a cap on yields.
The euro hit a two-decade low of $0.9528, affected by the energy crisis and escalating war risks in Ukraine.
The Australian dollar reached its lowest level in two and a half years yesterday and was set to rebound, with the Australian dollar rising 0.6 percent to $ 0.6500 and the New Zealand dollar 1.2 percent to $ 0.5703.
The Chinese yuan hit a two-and-a-half year low on Monday and was broadly stable at 7.1589 against the dollar on Tuesday.
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