The pound stabilised on Tuesday in the wake of some hawkish comments from a Bank of England (BoE) policymaker.
This came in the wake of a vote in the House of Commons to back a second reading of the government’s controversial bill granting it power to unilaterally alter the Northern Ireland protocol. A move which many GBP investors fear could trigger a UK-EU trade war.
Extending these losses in the middle of the week were comments from Bank of England (BoE) Governor Andrew Bailey.
Speaking with other central bankers at the European Central Bank’s Sintra forum, Bailey’s comments proved much more dovish than his peers in the ECB and Federal Reserve.
Bailey warned inflation in the UK is likely to remain higher for longer than either the US or Eurozone. While at the same time, Bailey’s newest colleague, Swati Dhingra, suggested the bank’s approach to future interest rate hikes should be ‘gradual’.
The pound’s downward trajectory then persisted through the end of the week, with a gloomy mood and weaker-than-expected manufacturing PMI keeping the pressure on Sterling.
A series of speeches by BoE policymakers may act as the main catalyst of movement in the pound this week. Will a broadly dovish tone push GBP exchange rates even lower?
Elsewhere we may see domestic politics influence Sterling sentiment, as Boris Johnson faces fresh criticism over his appointment of Chris Pincher as deputy chief whip of the Conservative party amidst allegations of inappropriate behaviour by Pincher.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)