Pound falls against US dollar, euro after death of Queen Elizabeth

NEW YORK/LONDON – The pound fell against the US dollar and the euro on Thursday in choppy trading after Queen Elizabeth, Britain’s longest-reigning monarch and the nation’s figurehead for seven decades, died.

“The Queen died peacefully at Balmoral this afternoon,” Buckingham Palace said in a statement.

The pound was last down 0.3 per cent, at US$1.1506. It hit as high as US$1.1516 following the news.

The euro rose 0.1 per cent against the pound, to 86.85 pence.

“There’s no significant impact on the pound,” said Amo Sahota, director of FX consulting firm Klarity FX in San Francisco.

“The Queen was clearly an icon in British culture, but politically very little significance,” he said. “There are going to be questions around the prime minister. It’s a government that is in transition anyway. But it won’t have any bearing on the economy.”

Charles, Britain’s new king, described the death of his mother, Queen Elizabeth, as “a moment of the greatest sadness,” in a statement issued by Buckingham Palace.

The pound had been trading lower earlier in the global session as hawkish remarks from Federal Reserve Chair Jerome Powell offset British policies unveiled by Britain’s new prime minister, Liz Truss, aimed at reducing surging energy costs.

In remarks at a Cato Institute conference, Mr Powell said the Fed needs to keep going until it gets the job done and that it is “strongly committed” to bringing inflation down.

His comments pushed the US dollar higher across the board, including against the pound.

The Singapore dollar, however, rose slightly against the US currency overnight. It was trading at 1.4039 to the US dollar at 7.54am on Friday, Singapore time, up 0.09 per cent from Thursday’s close, according to Bloomberg data.

Ms Truss told Parliament on Thursday that the average household energy bills would be held at around £2,500 a year for two years, staving off the expected 80 per cent leap that was due in October and that threatened the finances of millions of households and firms.

“The highlight of the Truss announcement is the energy intervention, expected to curb peak inflation by up to 5 percentage points,” said Kenneth Broux, currency strategist at Societe Generale.

“For the market, this is the big takeaway,” Mr Broux said. “The reason cable (sterling/dollar) has come down so much is not just a strong dollar but also the surge in inflation expectations.”

Mr Broux added that the UK inflation curve was reacting positively to the headlines and if inflation expectations come down “that saves the pound from new lows,” though he said it was too early to recommend buying sterling on the dips. REUTERS