Weekly Roundup: Pound firms on hopes for mild UK recession

The pound opened last week’s session on the back foot after Prime Minister Rishi Sunak rebuffed suggestions the UK government might pursue a Swiss-style trade deal with the EU.

Sterling’s fortunes quickly improved as the week continued, with GBP exchange rates initially strengthening amid an improving market mood and Bank of England (BoE) interest rate hike bets.

Stronger-than-expected PMI figures then helped ease fears over the depth of the recession facing the UK and extended the pound’s gains in the middle of the week.

The news that the Supreme Court had ruled that the Scottish government cannot legally call a second independence referendum without Westminster’s approval also appeared to contribute to Sterling’s rally.

However, the pound then ran into headwinds at the end of the week as news of more industrial action raised fears over potential disruption to the UK economy.

UK data is thin on the ground this week, likely leading any movement in the pound to come as a result of domestic developments. Sterling potentially being undermined by any further signs of disruption to come.