Wednesday, 21 June 2017

The pound recovers some ground

Today has seen the pound claw back some ground against the U.S. dollar, with the GBP/USD cross rising over a cent to briefly break the $1.27 barrier.


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Sterling lost ground yesterday following Bank of England Governor Mark Carney's speech at Mansion House, when he indicated that "now was not the time to increase interest rates". However the pound rebounded this afternoon after Bank of England Chief Economist Andy Haldane hinted that he could look to vote in favour of a rate hike during the second half of 2017.

Mr Haldane was not one of the three Monetary Policy Committee (MPC) members to vote for an immediate hike last week, but his comments today have given investors extra hope of a rate hike before the end of the year.

GBP/USD graph

Despite Mr Haldane's comments today, in my opinion I think it is unlikely we will see the Bank of England take any action in the near future, and with Brexit negotiations now in full swing, the pound will probably remain under pressure.

With that in mind, the rise we have seen for the pound today could well be temporary and we could easily see GBP/USD drop below $1.25 in the coming weeks.

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