UPDATE 2-Sterling rises amid BoE rate hike bets and energy price dip

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* Graphic: World FX Rates in 2021 tmsnrt.rs/2egbfVh

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

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LONDON, Oct 7 (Businesshala) – Sterling rose on Thursday as global risk sentiment improved and analysts said the Bank of England’s rate hike prospects eased some downside for the currency.

Sterling erased all of its strong gains for 2021 in September amid concerns about British economic growth and rising inflation, while the country grapples with a fuel crisis.

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But by 1445 GMT, the British currency had risen 0.3% to $1.3635 against the dollar, as it rebounded back to its weakest level since December 2020 on Wednesday.

It rose 0.25% against the euro to touch its highest level of 84.82 since mid-August.

Improved global risk sentiment on Thursday lent some support to the risk-sensitive pound, after Russian President Vladimir Putin promised to boost gas supplies and European stocks climbed into positive territory.

Analysts said prospects of a hike in interest rates in the UK also supported the pound.

Scotiabank’s chief forex strategist Sean Osborne said the market “supported the GBP against the euro thanks to BOE growth bets despite a combination of domestic risks in the UK”.

Analysts at UniCredit Research told clients that the prospect of higher rates in the UK is also reducing the “possibility of a downside” for the pound against the dollar.

Markets currently expect an increase of 15 basis points in December and an additional increase in 2022.

Analysts have also indicated that sterling has reacted little to post-Brexit uncertainties and renewed problems with Northern Ireland’s trading situation.

Meanwhile, energy regulator Offgame said more British energy suppliers could be shut down as higher wholesale energy prices are set to continue.

Data from mortgage lender Halifax shows British home prices have risen by the most in nearly 15 years before the end of the tax break for home buyers in September and are expected to continue their climb to new record highs Went.

Editing by Alison Williams and Edmund Blair


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