Yahoo Finance Pound pulls back against dollar as Bill Gross bets on sterling
The pound managed to make up some ground against the dollar (GBPUSD=X) on Friday, recovering from the 37-year low it hit earlier in the week.
Sterling was more than 1.1% higher at $1.1632 at the time of writing, picking up a cent as the US greenback fell against other currencies.
On Wednesday, the currency slumped as much as 0.9% to $1.1407, according to Refinitiv data, its lowest level since 1985.
Despite the slight recovery since then, experts are still pointing to the fact that the pound may fall further as Liz Truss seeks to increase government borrowing to fund a new energy support package. This is believed to cost around £100bn.
However, American investor and fund manager Bill Gross is betting on sterling, saying that it will rally against the dollar.
"Despite fiscal and political problems, I am long the pound because of an overvaluation of the dollar against all major currencies,” he told Bloomberg.
"Continued large trade deficits and a ceiling on the Fed’s ability to raise rates to anticipated levels due to future recession will limit further depreciation of the pound and likely lead to future relative increases compared to the dollar."
It comes as Liz Truss announced a limit on UK energy bills, with a cap at £2,500 a year starting from 1 October, amid soaring prices.
In one of her first acts as prime minister, she said chancellor Kwasi Kwarteng will set out the expected costs of the two-year energy package in a fiscal statement later this month.
The Institute for Fiscal Studies (IFS) condemned the move.
Read more: This is what Liz Truss’s energy bill plan means for you
"This is a huge policy intervention which could easily cost over £100bn in the next year alone, with more to come in the following year. Given the scale of the package, the failure to provide any official sense of a costing was extraordinary, and deeply disappointing," IFS director Paul Johnson said.
The energy cap, which limits the price suppliers can charge customers for units of gas, now means a typical household will save an average of £1,000 a year on their energy bills.
