Pound fluctuates on BoE Haskel comments

Trade in the pound was mixed on Friday, following a speech by Bank of England (BoE) policymaker Jonathan Haskel.

Meanwhile, the pound is trading sideways so far this morning, with GBP/EUR steady at €1.1709 and GBP/USD wavering around $1.2637. GBP/CAD is rangebound at CA$1.7008, while GBP/AUD holds at AU$1.9375 and GBP/NZD climbs to NZ$2.0617.

Looking ahead, expect movement in the currency market to be limited today ahead of some high-impact data releases later in the week.

What’s been happening?

The pound was met by volatility at the end of last week, in the wake of comments from Bank of England official Johnathan Haskel.

Haskel defended his decision to vote for an interest rate hike at the BoE’s most recent policy meeting as he said that he needed to see more evidence that inflationary pressures are dissipating.

However, he tempered this by suggesting that his vote to hike rates was ‘finely balanced’.

Meanwhile, the US dollar faced some headwinds on Friday after a revised consumer price index reported month-on-month inflation was slightly weaker than previously thought in December.

At the same time, the euro was muted at the end of the week as Germany’s finalised CPI figures for January confirmed inflation in the Eurozone’s largest economy cooled to its lowest levels since June 2021.

What’s coming up?

Turning to this week, while data is thin on the ground today, there are a number of high-impact releases scheduled in the first half of the session which could inject some notable volatility into the currency market.

Perhaps the most impactful will be the latest US consumer price index. January’s CPI figures are forecast to report a cooling of both headline and core inflation. Will this revive Federal Reserve interest rate cut speculation and drag on the US dollar?

For GBP investors the spotlight will be on the UK’s latest jobs report, where an expected uptick in unemployment and slowdown in wage growth could stoke Bank of England rate cut bets and sap demand for the pound.

Finally, the publication of Germany’s latest ZEW economic sentiment index will be the primary focus for EUR investors. Economists forecast sentiment will have continued to improve this month. Will this bolster the euro?