ExchangeRates.org.uk - The Pound to Dollar exchange rate (GBP/USD) initially made headway on Monday with a move to 10-day highs just above 1.2600, but failed to hold the gains and retreated to 1.2550 after the New York open.US equities dipped sharply after the US open and this also dragged UK markets lower which undermined Pound support.
Fragile risk conditions tend to benefit the dollar in global markets, although the main beneficiary of falling yields on Monday was the yen.
Position adjustment will also be a key element in the last trading days of 2024, maintaining the risk of choppy trading in the run-up to the New-Year holiday.
The Pound to Euro (GBP/EUR) exchange rate edged lower to just above 1.2050.
At this stage, the Pound is still set to be the second-strongest major currency of 2024, behind only the US dollar.
Within Europe, the Spanish inflation rate increased to 2.8% from 2.4% and above consensus forecasts of 2.6%.
The German and Euro-Zone inflation data will not be released until next week, but higher than expected figures would dampen expectations that the ECB would be in a position to cut interest rates aggressively.
A less dovish policy stance would limit the scope for aggressive Euro selling.
As far as data is concerned, the Chicago PMI index dipped to a 7-month low of 36.9 for December from 40.2 previously and below consensus forecasts of 42.7.
Following the data, the US 10-year yield dipped to 4.54% from over 4.60%.
Investment banks overall expect a firm dollar at the start of 2025.
Chris Weston, head of research at Pepperstone commented; "Despite paid forecasters almost universally calling for a weaker U.S. dollar in 2024, the greenback looks set to close the year higher against all major currencies with the buck reigning supreme."
This content was originally published on ExchangeRates.org.uk