Markets

Dollar hits three-month high as pound slumps to five-week low

The US dollar has hit a three-month high against a basket of local currencies, while sterling has continued its slide into a five-week low.

Boosted by the US 10-year treasury yield, which hit its highest rate in more than four years, the greenback rose to 91.08 against six major currencies, its highest level since mid-January. Meanwhile, the American currency set a two-month high against the Japanese yen.

Read more: Pound continues to slump as dollar maintains strong gains

News was not so good for the pound, however, which dropped to a five-week low overnight, slipping down to $1.39 against the greenback.

The pound has also fallen against the euro overnight, despite rallying over the weekend. Sterling was trading at €1.14 against the european currency, down from €1.15 earlier in the month.

The drop in sterling comes in the wake of Bank of England Governor Mark Carneys comments on interest rates which have made a rate hike in May seem unlikely.

Read more: Pound reaches new post-Brexit-vote high as traders wait for key wages data

Analysts say that sterling could be in for an even greater slump in the weeks ahead.

“With no high impacting data due and no news on the Brexit headline front, the pound could still struggle to capitalise on the softer dollar,” said Jasper Lawler, head of research at London Capital Group. “Minor data prints will come in the form of government net borrowing and CBI business optimism figures.”

The euro has rallied against the dollar, trading at $1.22 after dropping as low as $1.21, the lowest for the common currency since March 1.

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