On Tuesday, the British pound edged higher against the US dollar but remained little changed against the euro after a previous rally in the single currency proved short-lived. In recent days, sterling has been at the mercy of dollar strength, causing the currency pair to fall to its lowest level since November 2020 during Asia-Pacific trading hours on Tuesday.
In early trade, the pound had fallen as low as USD1.3079 before rising to USD1.3120. Sterling was little changed against the euro at 82.83 pence after reaching its highest level since June 2016 on Monday, thanks in part to diverging policy expectations from the Bank of England and the European Central Bank.
According to Lloyds Bank analysts, the primary focus right now is the sharp rise in energy prices. "The big question is whether central banks will see this as a further indication of inflationary pressures that require tighter monetary policy to respond to, or as an escalation of the downside risks to economic growth," Lloyds said.
Sensex, Ends 581-pt Higher; Nifty Reclaims 16,000
