The potential for earlier Federal Reserve interest rate hikes strengthened the dollar overnight, but the pandemic uncertainty continued to weigh on the broader forex market, as the potential for earlier Federal Reserve interest rate hikes strengthened the dollar overnight.
The dollar went up against its more risk-sensitive Australian and New Zealand counterparts ahead of crucial U.S. jobs data that could clear the path to earlier Federal Reserve interest rate hikes.
The pound fell by 0.2% to $1.328, within striking distance of its lowest level since December 2020, hit on Tuesday.
The pound fell 0.15% against the euro to 85.07 pence.
The sterling index is not far from mid-range trading since March, according to analysts.
They predicted that dollar strength would be the main driver of sterling until the Bank of England's rate decision on December 16. According to a survey by the BoE, British companies are struggling to find staff they need and expect higher inflation in the year ahead, which is weighing up whether to raise interest rates.
UBS argued that sterling could get support from the UK government's rush to expand its vaccine booster campaign to fight the new Omicron coronaviruses variant.
It said that the relative advantage would be drowned out if a worsening of global situation resulted in a correction in global equities.
Some analysts said that the U.S. was to delay trade talks with the UK over post-Brexit concerns over the Northern Ireland protocol, which could cause further uncertainty for the pound.
A U.S. administration official said on Thursday that the country's failure to remove tariffs on UK steel and aluminium has no connection to concerns about post-Brexit trade rules affecting Northern Ireland.