The euro fell 0.6%, at a one-year low, and the dollar was about 0.5% higher against the Japanese yen and Swiss franc.
“Cable (GBP/USD) is the dollar story at the moment,” said Nick Rees, currency analyst at Monex Europe.
Higher trade tariffs and tougher immigration under the incoming Trump administration are expected to fuel inflation, which could slow the Fed’s long-term interest rate cutting cycle, along with expectations of deeper deficit spending and higher economic growth in the near term. , raises Treasury yields, providing the dollar with additional support.
The benchmark 10-year Treasury yield reached 4.483% on Thursday, its highest level since July.
The pound was flat against the euro at 83.12 pence in the common currency, and Rees said the euro’s strength had been gradually strengthening in recent months, reflecting “European political risks that should be negative for the euro,” citing the situation in France and Germany.
The collapse of Germany’s ruling coalition last week has forced the country into early elections likely to be held in February, while the French government is trying to push forward its draft budget for next year, despite lacking a majority in parliament.
