LONDON, Nov 12 (Businesshala) – Sterling rose on Friday after the European Union committed to finding a workable solution with Britain over the Northern Ireland trade dispute.
Sterling has been under renewed pressure this week, amid concerns that a disagreement between Britain and the EU could trigger major trade disruptions, affecting the British economy, which is already compared to other prosperous nations. is lagging behind.
The European Commission’s Maros Sefkovic said on Friday that there was a welcome change in the tone of British Brexit minister David Frost in talks, but serious progress was still needed next week.
After he spoke, sterling jumped 0.5% against the dollar. At 1538 GMT, it was up 0.3% at $1.3404. The pound was still set for a third straight week of decline against the dollar, having fallen to its overnight low of $1.3354 since December. GBP = D£
Against the euro, sterling rose 0.3% to 85.39 pence and was set for weekly gains after declining against the single currency in the previous week.
“Today’s move in the pound is a reflection of easing Brexit tensions and removing downside risk to an already weak growth narrative,” said Simon Harvey, a currency analyst at Monex Europe.
Last week, the Bank of England left its key interest rate unchanged at 0.1% at its November policy meeting after it had previously indicated it could raise it.
Meanwhile, rising US inflation this week boosted the greenback amid bets that the Federal Reserve would raise interest rates faster than expected.
Scotiabank’s chief forex strategist Sean Osborne said sterling found some support on Friday as investors were buying sterling dips.
“GBP deal-hunting emerges despite ongoing BoE uncertainty,” Osborne said.
Economists polled by Businesshala expected the BoE to be the first major central bank to raise interest rates in December or early next year. In December, the market prices have risen.