FX round-up: Sterling goes for gold as as Rio Olympics end, metals prices fall

Sterling sprinted for gold on most of its major pairs today, as the Rio Olympics closed and some post-Brexit referendum pessimism was dialled back a jot.

CMC Markets UK market analyst Michael Hewson said sterling was among the best performing units today, as it attempted to build a base from last week's better-than-expected economic data.

"A number of growth upgrades also helped as various forecasters started to dial back some of their more pessimistic outlooks for the UK economy in the wake of the Brexit vote," he added.

Ratings agency Moody's was the latest among them to clip its recent downgrade, by upgrading its forecast for the UK economy for next year to 1.2%.

At roughly 17:10 BST, sterling was up 0.52% at $1.3143, and up 0.6% at €1.1610. It also rose against the Canadian, Australian, New Zealand, South African and Japanese currencies.

This bumper rise was in contrast to the yellow metal, which was down 0.23% to $1,343.1 an ounce.

Gold's Fosbury Flop was outpaced by silver, which platform dived 2% to $18.93 an ounce, and copper, hurdling down 1.15% to $215.25 a pound.

"As the lights go out on a carnival of sport in Rio, so the value of gold and silver has dimmed, with both tumbling at the hands of the US dollar's resurgence," said IG market analyst Joshua Mahony.

The greenback was mixed, gaining against the euro, loonie, rand and yen, but faltering versus the aussie and kiwi. At about 17:10 BST, the dollar-spot index was up 0.07% to $0.8836.

"In a week of low volumes and few volatility-driving events of note, it is no wonder that we are starting the week with one eye on the end of it, with (US Federal Reserve chair) Janet Yellen due to speak at the Jacksons Hole Symposium," said Mahony.

He reckoned the "question for now remains whether to hike or not and given that this decision will be determined on a meeting-by-meeting basis, markets are likely to be disappointed."

Oanda's Craig Erlam said markets expected a March rate hike in the US, and that if Yellen was determined to move earlier "she must take advantage of Friday's opportunity to drive that message home."

Hewson opined the dollar's continuation of Friday's rebound, aided in part by comments from Fed vice-chair Stanley Fischer who said on Sunday that the US central bank was within striking distance of its employment and inflation targets.

"The problem for the Fed though is that while we've seen a small rebound in the greenback as a result of these comments, the market reactions are becoming much more nuanced, largely due to scepticism that Fed officials actually believe what they are saying."

JP Morgan appeared to echo this sentiment, reiterating a comment from earlier this year that the Fed would struggle to tighten policy -- if at all -- and that the US dollar was peaking.