The pound sterling is on track for its steepest monthly loss against the US dollar since September 2022, as investor sentiment shifts in favour of the American economy. Sterling slipped 0.15 per cent on Thursday to $1.322 and fell 0.4 per cent against the euro to 86.46 pence. In July, the pound has dropped 3.7 per cent—its worst monthly performance since a 3.9 per cent plunge during the market turmoil triggered by then-Prime Minister Liz Truss's budget in 2022. While sterling remains nearly 6 per cent stronger against the dollar year-to-date, that figure is down sharply from nearly 10 per cent at the start of the month. The shift follows a dovish Federal Reserve stance on interest rates, paired with unexpectedly strong US economic data. Meanwhile, the UK faces weaker growth prospects and fiscal concerns, with markets pricing in at least two more Bank of England rate cuts this year. Speculative positions on the pound have turned neutral, according to US Commodity Futures Trading Commission data, marking a retreat from bullish sentiment seen since February. Analysts at Monex said sterling faces continued headwinds and see limited scope for recovery above $1.33. Attribution: Reuters Subediting: M. S. Salama
