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Pound reaches post-election high, edges above 1.28 mark

Published 28/06/2017, 11:49
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Investing.com - Sterling reached a post-election high on Wednesday following dovish comments from the Bank of England’s deputy governor Sir Jon Cunliffe.

At 13.10 BST, GBP/USD was up 0.23% at 1.2843. Sterling’s intraday high was 1.2846, the first time the pound had edged above the 1.2815 mark since the shock election result on 9 June.

Cunliffe spoke out on Wednesday in agreement with governor Mark Carney’s stance that no earlier than planned interest rate rise is necessary. This followed some hawkish comments last week from Monetary Policy Committee members Andy Haldane and Kristin Forbes, who support a hike before the end of the year.

Mark Carney will be among several of the world’s central bank governors to speak at the European Central Bank’s annual forum in Sintra, Portugal on Wednesday afternoon.

Investors will be watching for hints at a change in policy stance, particularly following president of the ECB Mario Draghi’s hawkish comments yesterday that sent the euro to a year-high.

The Nationwide UK House Price Index for June was better than expected. According to data released by Nationwide on Wednesday morning, house prices rose 1.1% in June, compared with a drop of 0.2% in April.

The euro made gains against most currencies on Wednesday following Draghi’s indication that inflationary pressures were temporary and that the ECB could look beyond them. EUR/GBP was 0.8861, up 0.14% on Wednesday morning.

The US dollar index, which measures the dollar’s strength against a trade-weighted basket of six major currencies was down 0.23% to 95.96, after a fall of almost 1% on Tuesday.

More disappointing US economic data on Tuesday and another delay to Trump’s healthcare bill have added to a weaker dollar.

Federal Reserve comments on Tuesday have also left investors with something to consider, as they speculate on whether the third rate hike will go ahead as planned later this year.

Sterling was fairly flat against safe haven currencies. GBP/JPY was down 0.06% at 143.87, while GBP/CHF was up 0.08% at 1.2319.

The pound was down against the commodity-heavy Canadian dollar. At 1.6787, GBP/CAD was down 0.73%.

Against the Australian dollar, GBP/AUD was 1.6907, up 0.05%. While GBP/NZD made gains of 0.22% at 1.7663.

Investors will listen to Carney’s speech at 14.30 BST.

Wednesday afternoon will see the first test of Prime Minister Theresa May’s minority Conservative government, propped up by the Democratic Unionist Party. The opposition Labour Party will make an amendment to the Queen’s Speech, which will be voted on in the House of Commons.

On Thursday afternoon, Members of Parliament will vote to approve the Queen’s Speech, the government mandate. This will be a vote of confidence for Theresa May’s government.

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