Sterling soars again vs euro, weakens against dollar

The British pound roared to another 5-1/2 year high versus the euro but dropped to its weakest since December 2020 against the dollar, as another volatile session sent investors to buy dollars.

European currencies have been falling fast since Russia invaded Ukraine as investors worry about the impact on their economies of the war and the surge in commodity prices.

While the UK economy is not as exposed as euro zone economies, the pound has been suffering versus the dollar but powered ahead against a euro falling against nearly all currencies.

By 1000 GMT, the pound was down 0.4% at $1.3175, having weakened to as low as $1.3157, its lowest since December 2020.

Against the euro, sterling rose 0.2% to 82.035 pence in Asian hours, its strongest since June 2016.

Investors have pared back their expectations for policy tightening from central banks including the Bank of England given the prospect of slowing economic growth. But traders are still pricing in a 25 basis point hike in rates from the BoE when it meets next week.