Investing.com - The pound continued to make gains on Friday as hawkish comments from Bank of England policy maker Ian McCafferty lingered ahead of the release of June’s inflation figures next week.
At 10:00 BST, GBP/USD was 1.2958. Sterling was up 0.14% on the dollar from the previous session close of 1.294.
One of the two remaining members of the MPC to have voted for a rate hike in June, McCafferty urged the BoE to consider winding down the stimulus programme. Reversing quantitative easing is a move that currently requires higher interest rates.
This is the first comment from a policy maker on the subject of winding down QE, speculators will wait to see if this takes precedence at the next MPC meeting on 3 August.
The jury is out on whether a rate hike will be supported in the upcoming meeting. Andy Haldane has been vocal in his support for a hike, however Ben Broadbent’s dovish remarks on Tuesday evening in favour of keeping rates as they are point to a divided committee. Broadbent referred to the many ‘imponderables’ of the economy saying he was 'not ready' to hike rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down just 0.09% to 95.47.
Federal Reserve Chair Janet Yellen testified in Congress on both Wednesday and Thursday.
Yellen’s comments were largely dovish and caused the dollar to dip. The Fed Chair indicated that rate hikes would be introduced more gradually, and that the focus would be on reducing the balance sheet.
The pound made reasonable gains against the euro on Thursday following euro-zone CPI data releases. German CPI was unchanged and as forecast at 0.2%. On Friday, EUR/GBP was 0.8805, down 0.05% on the previous day’s close.
Sterling performed well against safe haven currencies. GBP/JPY was up 0.21% at 146.88, while GBP/CHF was up 0.37% at 125.61.
GBP/NZD was 1.7721, the pound was up 0.29% on the New Zealand dollar. However, against the Australian dollar, GBP/AUD was down 0.17% at 1.6711. As one of its largest trading partners, strong Chinese trade data on Thursday strengthened the Aussie considerably, particularly following losses last week when the Reserve Bank of Australia kept rates unchanged.
The Loonie, which jumped on Wednesday following the Bank of Canada’s decision to increase rates for the first time in seven years, was down against the pound. GBP/CAD was 1.6505, the pound was up 0.29%.
Prime Minister Theresa May launched the Repeal Bill on Thursday, to reverse the 1972 Act and turn the existing EU laws into British laws. The opposition Labour Party has refused to support it as it stands, citing queries over workers' rights, while the Scottish and Welsh assemblies have also rejected support of the legislation in its current form.
Investors will be watching the release of US CPI this afternoon, along with retail sales. The earnings reports from JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) are also expected.