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Weekly roundup: BoE caution and IMF Brexit warning limit pound demand

currency-newsWeekly roundup: BoE caution and IMF Brexit warning limit pound demand
Even though markets were not surprised by the BoE’s decision to leave interest rates on hold once again this still limited the appeal of the pound.

Markets expect the bank to remain on the side lines for some months to come, given the elevated levels of uncertainty that still surround the outcome of Brexit negotiations.

While chief EU negotiator Michel Barnier maintained a generally upbeat message on the progress of talks the threat of a no-deal Brexit continued to weigh on the minds of investors.

The International Monetary Fund’s (IMF) latest warning on the subject further dented GBP exchange rates, highlighting that the UK economy will see slower growth even if a deal does materialise.

Confidence in the pound may deteriorate further if the UK consumer price index softens as forecast on Wednesday.

Although weaker levels of inflation would boost wage growth further a softer showing here would still give the BoE less incentive to return to a monetary tightening bias.

If UK retail sales are also found to have contracted on the month in August this could leave GBP exchange rates lacking in any particular support.
Philip McHugh

Philip McHugh

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)

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