The pound sterlingwhich rose more than one 1% a u$s1.08won a 0.3% after plummeting to a record low on Monday.
The euro fell 0.20% to u$s0.96, and the greenback rose a 0.1% in front of yen at 144.86.
Tuesday’s moves were minor compared to the dollar’s recent significant gains.
The Governor of the Bank of England, Andrew Bailey, who tried to calm the markets by saying that the bank will raise rates as much as necessary at its next meeting.
The weakening of the pound sterling comes after new UK finance minister Kwasi Kwarteng on Friday unveiled the country’s biggest package of tax cuts in 50 years, likely funded by a huge increase in debt even as the country faces slowing growth and two deficits. That said, it is debatable how much the pound can go up from now, as Bailey rules out an emergency rate hike for now.
Furthermore, the Fed does not look like it will back down from its aggressive inflation-fighting stance any time soon.
Cleveland Fed President Loretta Mester said on Monday that the US central bank should raise rates and maintain a tightening policy for some time, adding that if a mistake has to be made, better for the Fed to go over than to go short.
The dollar index, which tracks the currency against a basket of six other major currencies, fell 0.5% to 113.500, not far from Monday’s 114.58 level, its highest level since May 2002.
Source: Ambito
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