By Joice Alves
LONDON (Reuters) – Sterling rose on Monday from a one-month low against the dollar after Federal Reserve Chair Jerome Powell declined to meaningfully harden his tone on inflation, renewing bets of less-aggressive U.S. monetary tightening.
Despite last week’s very strong U.S. employment numbers, in a question-and-answer session before the Economic Club of Washington on Tuesday, Powell reiterated he felt a process of “disinflation” was underway.
“The stronger pound this morning is largely a spillover from the improved risk environment overnight, which was driven by Chair Powell’s more conservative stance on rates in light of Friday’s payrolls report,” said Simon Harvey, head of FX Analysis at Monex Europe.
Harvey added that the magnitude of the pound’s rally was largely due to its underperformance on Tuesday, “so there is a bit of a catch up effect taking place”.
Sterling was up 0.34% to $1.2091 against the dollar after hitting its lowest level since Jan. 6 on Tuesday of $1.1961.
It rose to a six-day high against the euro, up 0.16% to 88.89 pence, after falling last week to a four-month low versus the single currency.
BOE, GDP IN FOCUS
Traders will be waiting for economic growth numbers due on Friday for clues on what the Bank of England’s (BoE) next move will be. The central bank last week raised borrowing costs for the 10th time to 4%, but hinted it was close to ending its run of rate hikes.
Money markets are currently pricing in a peak in BoE interest rates of 4.25% by the summer amid signs inflation is easing. [IRPR]
Britain’s labour market showed some signs of cooling in January with starting pay for people hired for permanent roles growing at its slowest pace in almost two years, according to a survey of recruitment firms published on Wednesday.
BoE Governor Andrew Bailey, who will speak on Thursday to lawmakers about the central bank’s decision to raise rates to a 14-year high, said last week that labour market data would be key for understanding how quickly inflation falls.
(Reporting by Joice Alves; Editing by Sharon Singleton)
Global Banking & Finance Review
Why waste money on news and opinions when you can access them for free?
Take advantage of our newsletter subscription and stay informed on the go!
By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
Top Stories2 days ago
Nestle misses sales estimates as price hikes deter shoppers
Finance4 days ago
Leading a different kind of charge: Financial Institutions as climate change activists
Business4 days ago
Behind the Patents: Personal Insights from Alexander Galitsky
Top Stories4 days ago
Citigroup raises CEO Jane Fraser’s 2023 pay by 6% to $26 million