Sterling suffered across the board today following a huge plunge in global stocks extinguished hope the Bank of England will look to raise interest rates anytime soon. The pound fell against most of its major counterparts, losing around 1.5% against the euro during today's session.
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However, it wasn't all doom and gloom for those of you looking to purchase U.S. dollars. With stocks falling any chance of a rate hike by the U.S. Federal Reserve next month all but disappeared and resulted in GBP/USD actually rising.
The currency pair rose from $1.5631 and got within touching distance of $1.58 for the first time since June, reaching a high of $1.5798.
Uncertainty sparks sell-off!
With concerns rising over the state of China's economy and the recent devaluing of the yuan investors have been selling off commodity based currencies such as the Australian and New Zealand dollars and returning to safer alternatives.
The main beneficiary of today's sell off was actually the euro, which gained over 3% against the dollar today. With all the turmoil the euro has faced this year it is hard to believe the euro is now being seen a safe-haven but just goes to show how quickly things can change in the currency markets.
Interest rate hike.....what hike?
Following today's events it seems unlikely we will see any action taken by the UK or U.S. central banks anytime soon which makes predicting the future of GBP/USD even more difficult. A couple of weeks ago everyone thought the Fed would raise rates in September which could have forced GBP/USD back towards $1.50 but now there is every chance we could see the pair rise towards $1.60 in the coming weeks.
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