Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Pound Hits One-Week High Ahead of Brexit Talks; BoE Cools Negative Rate Fears

Published 28/09/2020, 18:50
Updated 28/09/2020, 19:23
© Reuters.

© Reuters.

By Yasin Ebrahim

Investing.com – The pound rallied to a one-week high on Monday as the Bank of England pushed back against the prospect of negative rates, while hopes the UK and EU can reach a deal post-Brexit deal also improved sentiment.

GBP/USD rose 0.90% to $1.2849.

Bank of England deputy governor for markets and banking governor policymaker Dave Ramsden said that while the BoE was "duty bound" to review negative rates as a potential policy tool, it was not expected to cut rates below zero "imminently."

"For me, I see the effective lower bound still at 0.1 which is where Bank Rate is at present," Ramsden said in an interview with Britain’s Society of Professional Economists posted online.

The move helped calm investor jitters the BoE is on a path to cut rates below zero after the bank's monetary policy committee Silvana Tenreyro said there was evidence that negative rates had proved effective.

Sentiment on the pound was also helped by tentative hopes the EU and UK will be able to resolve their differences as both sides are set for a final round of trade talks underway before the EU summit in mid-October.

The United Kingdom continues to reiterate that it is unlikely to budge over key sticking points including fishing policy and the commitment to a "level playing field" in competition.

The U.K. has made it clear it wants to regain control over access to its waters and fish when the Brexit transition period ends, rather than stick with the EU's common fisheries policy, which sets fishing quotas for EU member states.  

While the EU has hinted it is willing to compromise on some issues, the economic bloc has reiterated it would not agree to any measures that threaten the four freedoms - goods, people, capital, services -  of the single market.

The UK-EU relations has also been further soured by the British prime minister Boris Johnson's move to push through an internal market bill that undermines the Brexit withdrawal agreement.

There might be 'hints' of progress ahead of the European Council meeting on 14-15 October, but it may end up being more posturing before the can gets kicked down the road again for another two weeks a la Brexit tradition.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.