The sterling managed to regain some ground against the US Dollar after falling to record lows on Monday, but we’re still in crisis mode following what many are calling an ill-conceived mini-budget whipped up by chancellor Kwasi Kwarteng last Friday.
Speculation that the Bank of England (BoE) was preparing an emergency rate rise failed to come to a head, and reassurance that it “will not hesitate” to change rates as needed didn’t manage to shore up much confidence.
The GBP/USD pair was trading at US$1.08 as of 11:00 BST.
GBP/USD’s performance over past six months a grim sight
As a side note, the Bank of Japan (BoJ) showed took more decisive action when faced with the same crisis, having announced a 250bln yen (£1.6bn) bond buy-buying programme overnight.
The EUR/USD pair remains at yearly lows, still trading under parity at US$0.96.
“Further decisive action is required to bring the inflation rate down to 2% in the medium term,” said Bundesbank president Joachim Nagel, suggesting more hawkish action from Germany’s federal bank.
All in all, the US Dollar continues to lead the G10 currencies, though some commentators are concerned about a sharp pullback should its (relative) safety status begin to unwind.
"Positioning is crowded," Calvin Tse, head of global macro strategy at BNP Paribas (EPA:BNPP), told Reuters, adding: "If we get a catalyst, the dollar can turn, and turn very aggressively," he said.