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Weekly roundup: Pound rallies sharply as BoE policymaker talks down negative interest rates

currency-newsWeekly roundup: Pound rallies sharply as BoE policymaker talks down negative interest rates
The pound was lifted at the start of this week after speculation over the possibility of the BoE implementing negative interest rates faded in response to Bank of England (BoE) deputy governor Dave Ramsden’s comments.
 
Ramsden asserted his belief that interest rates are already at their lower bounds, which gave GBP exchange rates a sharp lift.
 
The pound also benefitted from a sense of optimism that grew ahead of the final round of UK-EU talks, with investors hopeful that a deal could still materialise.
 
Meanwhile, Chancellor Rishi Sunak unveiled his ‘Winter Economy Plan’, which despite giving the pound modest support initially, failed to really impress GBP investors given it is less generous than the furlough scheme that is coming to an end.
 
This added to concerns over the prospect of a wave of job losses and high unemployment, which may limit the potential for greater pound gains.
 
The main driver for pound exchange rates will likely be the formal Brexit trade talks that resumed this week, with GBP exchange rates fluctuating on headlines regarding progress.

Confirmation this week that the second quarter UK gross domestic product plunged -20.4% on the quarter could put a dampener on the pound.
 
As long as signs continue to point towards underlying weakness within the UK economy, GBP investors may struggle to find further incentive to buy into the pound.
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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