Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Sterling set for third straight weekly gain, but vulnerable

Economy Nov 25, 2022 10:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester, Britain, Septem,ber 21, 2018. REUTERS/Phil Noble

By Stefano Rebaudo

(Reuters) - Sterling was slightly lower on Friday but still set for its third consecutive weekly gain against a weakening U.S. dollar.

Analysts expect the pound to remain vulnerable as central banks, including the Bank of England (BoE), will tighten their monetary policy even into a recession, which is expected to be deeper in Britain than in the U.S.

Expectations for rate hikes, which usually boost a currency's value, might harm the pound by dampening the country's economic outlook.

"In view of major economic and inflation risks, GBP yields cannot be high enough to prevent particular risk premiums," said Ulrich Leuchtmann, head of forex research at Commerzbank (ETR:CBKG).

Britain's Office for National Statistics on Friday revised producer price inflation figures, meaning factory gate inflation this year has been higher than previously thought.

The dollar was headed for a weekly loss as the prospect of the Federal Reserve slowing monetary policy tightening preoccupied investors.

At 0958 GMT, the pound was down 0.3% against the dollar at $1.2076. It hit $1.2153, the highest level since August 12, on Thursday.

Sterling was down 0.1% versus the euro at 86.01 pence. It was set for its third straight weekly rise versus the dollar and the euro.

"We continue to find it difficult to see the current GBP-USD rally as sustainable over the long run given the bleak picture for the UK economy," Unicredit (BIT:CRDI) analysts said in a note.

"The tight budget recently announced by the UK government will likely make it harder for the BoE to deliver tougher monetary policy to address inflation," they added.

British finance minister Jeremy Hunt announced tax increases and tighter public spending last week.

BoE Deputy Governor Dave Ramsden backed more interest rate hikes on Thursday, but said he would consider cutting rates if the economy and inflation pressures panned out differently from his expectation.

BoE policymaker Catherine Mann said on Thursday that she expected inflation would be at the upper end of the range of forecasts published by the central bank earlier this month.

Wednesday's news that the Scottish government cannot hold a second referendum on independence next year without approval from the British parliament had little impact on the pound.

Sterling set for third straight weekly gain, but vulnerable
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email