Sterling rises as Sunak prepares to take office, euro awaits interest decision

The British pound rose on Tuesday, boosted by an improvement in risk appetite as Rishi Sunak prepares to take over as Britain’s prime minister. At the same time, the euro stabilized ahead of the European Central Bank’s expected rate hike on Thursday.

The dollar rose slightly, but not far from its lowest level in October, amid signs that the Federal Reserve’s hike in interest rates is slowing the world’s largest economy.

The British Prime Minister’s Office announced on Monday that Sunak will become Britain’s next prime minister. Sunak is scheduled to meet King Charles today before speaking at 10 Downing Street.

British government bonds continued to recover and 20-year bonds returned to a level not reached since September 23, when former Prime Minister Liz Truss’s economic agenda led to a crash in sterling-denominated assets.

And the sterling is heading to its highest level this month, and it rose 0.3 percent to 1.13125 dollars at 0825 GMT. However, currency experts expect the currency, which has fallen more than 16 percent against the dollar this year, to remain under pressure.

As for the euro, it fell 0.07 percent to $ 0.9866, but it is not far from its highest level since early October, while the European Central Bank appears to be ready to raise interest rates by 75 basis points on Thursday to curb high inflation.

The dollar index, which measures the greenback against six other major currencies, rose 0.13 percent to 112.

The yen settled at around 149 against the dollar after an intervention believed to be made by the Bank of Japan on Friday and Monday.

The Finance Ministry declined to comment on whether it had ordered the intervention in recent days. However, it had previously confirmed the intervention in September in the Japanese authorities’ first purchase of the yen since 1998.

The Chinese currency continued the decline it began after Chinese President Xi Jinping’s selection of the leadership team at the Communist Party Congress, which takes place once every five years, raised fears that growth could be sacrificed to adhere to ideological-driven policies.

The yuan fell on the mainland to a 15-year low on Tuesday, while offshore, it fell to a record low of 7.3650 per dollar.