LONDON: The British pound climbed towards five-month highs on Tuesday, benefiting from broad-based dollar weakness even as data showed job losses in Britain jumped to their highest levels in more than a decade in the three months to June.
Against a basket of rival currencies, the US dollar fell nearly 0.5% towards more than two-year lows amid growing concerns the US economy will underperform its rivals due to its struggles to contain the coronavirus pandemic.
Against the greenback, the pound was broadly up at $1.3105. It hit a March 2020 high of $1.3185 last week. Versus the euro, it drifted to a one-month high of 89.82 pence. "With the dollar weakening, we have also seen the pound appreciating slightly on the back of that," said Morten Lund, an analyst with Nordea. "When we have seen some speculative positioning being unwound, that has led to a stronger pound."
But expectations about further pound gains were also muted. Though Britain's unemployment rate unexpectedly held steady at 3.9% and a second consecutive month of growth in retail sales indicated an economy on the mend, a nearly 7% rally in the British currency over the past six weeks has raised concerns the pound's gains may be overdone in the short term.