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The US avoids a default on its debt

US stocks rise after the Senate vote with the US Dollar weakening..


The S&P 500 index rose by 1% overnight, which meant GBP-USD followed in similar fashion. Cable now sits at a 2-week high and we should see the recent $ dominance fade from here. This is mainly because of interest rates, where the Fed looks like it's slowing down or stopping it's hiking cycle, whereas the BoE still have more to do to curb red-hot inflation. 

That being said, June and Q2 in general, has historically been £ negative. So we remain cautious in how the month may pan out for Sterling rates. Last month did buck the trend over the last 8-years or so though with a surprisingly strong month across the board for the Pound. 

Because of that performance, many analysts are tipping for further upside to the Pound, but it remains extremely limited by 0.5%-1%. This is because Sterling is performing (or potentially over-performing) right at the top of its expected chart across most currencies and the downside could be considerable if it does arrive..