The euro and the pound fell against the dollar (GBP/USD) as investors are confident that interest rates in Europe will stay low for longer. The dollar’s rise came a day after currency markets ignored a high US inflation rate that is likely to be temporary. The pound/dollar exchange rate declined by more than one percent at the time, contrary to the expectations of a bullish trend voiced by some analytics. Our own forecast for pound to dollar rate is 1.4 USD per GBP. After that, the GBP regained some losses.

At the end of the week, almost all major currencies showed a decline. The largest decline against the US dollar was shown by the New Zealand dollar (-1.01%). The Canadian dollar (-0.74%), the Euro (-0.46%), the Australian dollar (-0.41%), the British pound (-0.24%) and the Japanese yen (-0.17%) recorded a smaller drop. Only the Swiss franc rose (+0.06%).

The dollar exchange rate against the pound and the euro strengthened

The dollar’s rise came a day after currency markets ignored a high US inflation. The dollar index, which measures the dollar’s exchange rate against a basket of world currencies, rose 0.49% to 90.51. A day after the European Central Bank remained committed to its “dovish” stance, ECB policy maker Claes Noth said flexible fiscal rules would be required for many years as monetary policy remains “constrained.”

“ECB policy makers are pointing out that the rate of inflation is well below the levels needed to raise rates,” said Carl Chamotta, chief market strategist at Cambridge Global Payments. “This negates the recent rally of the euro, putting some downward pressure on it. The biggest contributor to the movement we’ve seen is the weakness of the euro, as opposed to the peculiar positive strength of the dollar.”

The pound fell 0.4% (GBP/USD rate) against the dollar, hit by the rapid spread of the Delta variant of the coronavirus in the UK, raising concerns that much of the country may not be able to exit lockdown mode on June 21 as planned.

In the Forex market, the GBP/USD is slightly down to 1.4145, the pound declined due to growing concerns about the spread of a new delta strain. At the same time, AUD/USD -0.2% is at 0.7738; a number of nearby options expire on Friday.