Dollar Dominance Persists as Sterling Struggles to Recover

Sterling showed signs of strain against a dominant dollar, sliding toward its poorest weekly showing since November. The currency’s weakness stems from multiple pressures: disappointing mortgage approval numbers in November, surging European gas prices hitting year-long highs, and persistent dollar strength driven by expectations of higher U.S. rates under the incoming Trump administration. The UK’s particular vulnerability to gas price shocks, combined with cooling economic indicators and the Bank of England’s dovish stance, has undermined the pound’s position despite its strong performance against the dollar in 2023. Markets anticipate fewer rate cuts from the BoE (60 basis points) compared to the ECB’s expected 100+ basis points, creating notable policy divergence that’s influencing currency movements.



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