Sterling steadies as interest hike expectations lend support

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* Graphic: World FX Rates in 2020 tmsnrt.rs/2egbfVh

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*Graphic: trade-weighted sterling since the Brexit vote tmsnrt.rs/2hwV9Hv

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LONDON, Oct 7 (Businesshala) – Sterling held steady against the dollar and the euro on Thursday with the Bank of England raising prospects for a rate hike, reducing downside prospects for the currency, analysts said.

Sterling has erased all of its strong 2021 gains as concerns mount about British economic growth and rising inflation, as the country grapples with a fuel crisis.

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The British currency was flat at $1.3584 against the dollar at 0838 GMT after touching a December 2020 low on Wednesday amid a sharp rise in energy prices.

A rebound in oil prices from several-year lows on Thursday and improving global risk sentiment with European stocks in positive territory gave some support to the pound.

But analysts said in separate notes to clients that the prospect of a hike in interest rates in the UK was preventing the pound from sliding further.

“The prospects for higher rates in the UK are probably outpacing downside prospects for GBP-USD,” said analysts at UniCredit Research. “Although EUR-GBP’s attempt to slide below 0.85 is quite relevant”.

The pound fell 0.1% to 85.16 pence against the euro in the previous session, after jumping to a high of 84.95 pence in mid-August.

The market currently has a nearly 90% chance of a rate hike of 15 basis points in December and two hikes by June 2022.

Meanwhile, data from mortgage lender Halifax showed British home prices rose by the most in nearly 15 years in September before the end of the tax break for home buyers and are expected to continue their climb to new record highs. Went. [nL8N2R314D (Editing by Emelia Sithole-Matarise)

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