Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Sterling edges up, helped by optimism about UK COVID-19 outlook

ForexAug 03, 2021 15:50
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: UK pound coins plunge into water in this illustration picture, October 26, 2017. Picture taken October 26, 2017. REUTERS/Dado Ruvic/Illustration/File Photo

By Elizabeth Howcroft

LONDON (Reuters) -Sterling strengthened slightly on Tuesday, helped by recent falls in COVID-19 infections in Britain, optimism around Britain's lockdown easing and market anticipation of hawkish signals when the Bank of England meets on Thursday.

The pound had a rebound after most lockdown measures in England were dropped on July 19, reaching as high as $1.3984 at the end of the month. Since then it has stayed mostly above $1.39.

The currency was up 0.1% versus the dollar, at $1.39 by 1435 GMT. Against the euro, it was 0.2% stronger, at 0.8536.

Lee Hardman, currency analyst at MUFG, said the rebound in the pound reflects optimism that the pandemic could be largely over by the Autumn.

"If cases continue to rise less than feared, it will reinforce confidence that restrictions are unlikely to be tightened significantly again, allowing the UK economy to continue rebounding strongly during the 2H 2021," he said.

But Kenneth Broux, FX strategist at Societe Generale (PA:SOGN), said that the cable rally was driven more by month-end flows last week and dollar profit-taking, as well as M&A activity.

Speculators' net short position on the pound also creates a fertile ground for sterling gains, Broux said.

On a quiet day for economic data, investors are looking ahead to the Bank of England meeting on Thursday.

The central bank is expected to maintain its nearly 900 billion pound ($1.25 trillion) bond-buying programme, although two policymakers have broken ranks to suggest that the time for tighter monetary policy might be nearing.

The BoE is expected to be among the first of the world's main central banks to begin the process of stopping stimulus support.

"If the MPC (monetary policy committee) splits, if it's a 6-2 vote or 5-3, that's going to give a signal and I think the market could rally on that," Broux said.

British 30-year and 20-year government bond yields , both fell to a six-month low on Tuesday, down by around 2 basis points on the day, reflecting investor appetite and a broader fall in U.S. Treasury yields.

Interest rate futures currently price in the BoE raising the benchmark Bank Rate to 0.25% from its current 0.1% by August 2022.

The British public's expectations for inflation over the coming year jumped to 3.1% in July in response to recent rising prices, although longer-term expectations remained stable, a monthly survey showed.

($1 = 0.7189 pounds)

Sterling edges up, helped by optimism about UK COVID-19 outlook
 

Related Articles

Sterling edges up after UK inflation jump
Sterling edges up after UK inflation jump By Reuters - Sep 15, 2021

By Joice Alves LONDON (Reuters) -Sterling edged up on Wednesday after data showed British inflation hit a more than nine-year high last month, fuelling expectations the Bank of...

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
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email