GBP/USD strikes two-month high on hawkish BoE comments
Philip McHugh November 22nd 2023 - 2 minute read
The pound trended higher on Tuesday in response to some hawkish comments from Bank of England (BoE) policymakers.
Meanwhile, trade in the pound is mixed this morning, with GBP/EUR wavering around €1.1491 and GBP/USD slipping to $1.2510. GBP/CAD is rangebound at CA$1.7171, while GBP/AUD is slightly higher at AU$1.9138 and GBP/NZD climbs to NZ$2.0783.
Coming up, will a positive response to Jeremy Hunt’s Autumn Statement help to bolster GBP exchange rates later this afternoon?
What’s been happening?
The pound strengthened yesterday after some surprisingly hawkish comments from BoE policymakers as they testified before Parliament’s Treasury committee.
BoE Governor Andrew Bailey pushed back against speculation that the BoE might be considering interest rate cuts next year.
Alongside comments from Bailey’s colleagues Dave Ramsden and Catherine Mann, in which they suggested more tightening might be needed, this helped to send Sterling higher.
Meanwhile, a drop in US Treasury yields left the US dollar to drift lower through the European trading session on Tuesday.
The publication of the minutes from the Federal Reserve’s latest policy meeting seemed to stem USD’s losses. Policymakers left the door open to further rate hikes, although the minutes were not hawkish enough to lift the ‘greenback’.
At the same time, the euro struggled as markets digested some dovish comments that European Central Bank (ECB) policymakers made on Monday night.
What’s coming up?
In the spotlight today will be the UK’s Autumn Statement, which will be delivered by Chancellor of the Exchequer Jeremy Hunt later this afternoon.
Hunt will outline the government’s plans for tax and public spending and respond to the latest forecasts from the Office for Budget Responsibility (OBR).
If markets are receptive to his plans, then the pound is likely to strengthen.
For USD investors the focus will be on the latest US durable goods data. October’s figures are expected to report a sharp contraction in orders, which could see the US dollar test new multi-month lows.
Finally, the Eurozone’s latest consumer confidence figures are expected to report a modest improvement in household morale this month. But will this be enough to lift the euro?
Written by
Philip McHugh