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Sterling gains, on track to snap 3-week losing streak
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LONDON (Reuters) – The pound edged higher on Monday, breaking a three-week losing streak versus the broadly struggling U.S. dollar as hawkish comments from policymakers supported the currency.
LONDON (Reuters) – The pound edged higher on Monday, breaking a three-week losing streak versus the broadly struggling U.S. dollar as hawkish comments from policymakers supported the currency.
While the Bank of England raised interest rates by just a quarter point last week – lagging more robust action from the U.S. Federal Reserve and other central banks, markets are putting a 80% chance on a half-point rise in July and expect almost 100 basis points of tightening by September.
The BoE’s new message that it may have to act “forcefully” on interest rates is not unconditional and depends on the persistence of inflation pressures, the central bank’s chief economist said on Friday.
“A number of factors point to pound weakness at the moment but supported Bank of England rate expectations have provided a floor for now, and the pound is stabilising at the centre of the 1.20-1.25 area,” ING strategists said in a note.
Against the U.S. dollar, the pound is up 0.1% at $1.2236 after three consecutive weeks of losses. It fell to a March 2020 low of $1.1934 last week.
Net short pound positions fell for a third consecutive week, according to latest positioning data as some traders have cut back on their bearish pound bets.
(Reporting by Saikat Chatterjee; editing by Mark Heinrich)
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, managing monetary policy, and ensuring financial stability.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They influence economic activity and inflation.
Foreign currency refers to any currency that is not the domestic currency of a country. It is used in international trade and investment.
Forex trading involves buying and selling currencies in the foreign exchange market to profit from changes in exchange rates.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
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