LONDON: The pound fell against the dollar on Friday, as a stock market selloff hit currencies more geared towards global growth, while holding broadly steady against the euro around a 19-month high.
“The market impact of yesterday’s Bank of England (BoE) policy update was overshadowed by the deepening selloff for AI-related investments,” said Lee Hardman, senior currency analyst at MUFG.
The major domestic event of the week was Thursday’s BoE meeting, which saw a rate rise and strong hints that at least one further increase will be needed, barring a sudden de-escalation in the Gulf and a fall in oil prices.
Tech stocks tumbled on Wall Street on Thursday, and Asia on Friday, before broadening out in European trading, giving a boost to the dollar.
The pound was last at US$1.3399, down 0.4 per cent, though roughly flat on the week due to gains in earlier sessions.
It was at 83.41 pence per euro, steady on the day and week, and close to its highest since March 2025 which it hit Thursday in the aftermath of the BoE meeting.
“The pound has recently been supported by growing optimism over stronger UK growth, higher UK yields and fiscal concerns becoming a bigger market issue in the euro area than in the UK,” said Hardman.
The BoE policy update should reinforce sterling’s bullish momentum heading into year-end, but one risk for the currency would be a deeper selloff for AI stocks, he added.