* Graphic: World FX Rates in 2020 tmsnrt.rs/2egbfVh
*Graphic: trade-weighted sterling since the Brexit vote tmsnrt.rs/2hwV9Hv (Adds speech by UK’s Frost, analyst comments)
LONDON, Oct 12 (Businesshala) – Sterling held near a two-week high against the dollar on Tuesday, as UK jobs data largely came in line with forecasts, raising hopes of future rate hikes from the Bank of England. doing.
The pound hit a two-week high on Monday over lewd comments from BoE Governor Andrew Bailey, who stressed the need to curb inflation, and fellow policymaker Michael Saunders, who said households would be charged “quite early” interest. Be prepared to increase the rate.
The BoE, which is gearing up to become the first major central bank to raise rates since the coronavirus crisis, is looking at how many people became jobless after the end of the country’s pandemic programme.
Data showed British employers raised their payrolls to a record high in September, while the unemployment rate fell to 4.5% in the three months to August, in line with forecasts by economists in a Businesshala poll.
Money market pricing shows an increase of about 8 basis points from the BOE price at the beginning of the bank’s November meeting.
By 1510 GMT, sterling was trading near the $1.36 mark against the dollar and below Monday’s peak of $1.3674.
Against the euro, it was up 0.1% at 84.91 pence, a touch higher.
“This data has nothing to back up against the early pricing of the BOE tightening cycle,” ING strategists Chris Turner and Francesco Pesol said in a note to clients.
Positioning data from the CFTC on Friday showed the biggest weekly trimming of speculative positions in the pound in two years, with a change from neutral to short positions on the currency.
At the same time, respondents to Deutsche Bank’s October Market Sentiment Survey said they expect the BoE to err on the hawkish side.
“Investors are clearly concerned about the impact on demand for rate hikes, given the rise in energy prices and a hike in the national insurance tax next April,” said Jane Foley, head of FX strategy at Rabobank. “There are fears that the combined headwinds could derail the recovery.”
Investors are also monitoring tensions between Britain and the European Union over the Northern Irish Protocol, which governs post-Brexit trade in the province.
On Tuesday, British Brexit minister David Frost reiterated his call to change the protocol amid complaints of disruption in trade between Northern Ireland and the rest of the United Kingdom, as it left the European Union entirely.
Frost said Britain was looking forward to two to three weeks of in-depth talks with the EU on the protocol. (Reporting by Rithvik Carvalho; Editing by Kirsten Donovan and Gareth Jones)