Sterling hovers near six-day highs vs dollar, euro

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* Graphic: World FX Rates in 2020

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*Graphic: trade-weighted sterling since the Brexit vote

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LONDON, Oct 4 (Businesshala) – Sterling hovered near its highest level in nearly a week against both the dollar and the euro on Monday, as a broadly stronger dollar kept the currency near the level it hit on Friday.

Rising inflation expectations early last week saw a higher rise in bond yields and dented risk sentiment in equity markets, pushing sterling to its lowest level since December 2020. Sterling moves in line with global risk sentiment.

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The pound has made a tentative recovery since the latter half of last week, reaching $1.3576 in early deals in London on Monday, its highest since September 28. This still leaves the currency down 0.8% against the dollar.

Sterling was one of the best performing G10 currencies against the dollar in the first half of 2021, fueled by global reflation trade and optimism over Britain’s vaccination programme. But the post-Brexit hangover has left Britain facing many problems from labor shortages in supply chains and disputes with the European Union over Northern Ireland.

Labor shortages after Brexit and the COVID-19 pandemic have thrown some sectors of the economy into disarray, disrupted fuel and medicine deliveries, and a shortage of slaughterhouse workers forced more than 100,000 pigs to face a well. have to do.

Britain’s Brexit minister has prepared a proposal to permanently replace the Northern Ireland Protocol, a part of the Brexit divorce deal, and the government will make a decision by the end of next month, British newspapers reported.

Ministers are also due to make a decision by the end of next month on whether to unilaterally postpone the Northern Ireland Brexit deal, The Times reports.

ING analysts Francesco Pesol and Chris Turner said in a morning note, “GBP has been volatile – caught behind surprisingly hawkish Bank of England and Brexit travels – particularly on the maritime border with Northern Ireland.”

“Both topics hit the agenda today. Dave Ramsden of the BoE speaks at 14CET. He was one of two MPC members who voted for the BoE to end QE early. Later in the day we will get the Conservative Party convention I should hear from Lord Frost. Here he can shed light on whether the UK government wants to fire the Article 16 protocol – potentially opening up the worm again.”

Against the euro, sterling remained largely unchanged at 85.61 pence per euro. (Reporting by Rithvik Carvalho; Editing by Hugh Lawson)


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