By: DailyForex.com
The Pound Sterling edged higher versus both the US Dollar and the common currency Euro as investors speculate on the likelihood of an interest rate adjustment from the Bank of England. Thus far, economic data has been largely better than anticipated in the near two months since the Brexit decision which has led to a sentiment shift on the need for more easing from the BoE. Recently Sterling short positions had reached a record number of contracts through August 16th and investors are now apparently taking profits and unwinding bets. The latest data showed that manufacturing exports for Britain touched a 2-year high in August, adding to upbeat data from last week which showed retail sales and inflation besting analysts’ forecasts.
As reported at 10:53 am (BST) in London, the GBP/USD was trading at $1.3223, up 0.17%; the pair has ranged from a low of $1.3158 to a peak of $1.3235 in today’s trading session. Meanwhile, the EUR/GBP was trading down at 0.8530 pence, close to the session trough of 0.8526 pence.
Odds for a BoE Rate Adjustment Decrease
Currency strategists believe that the Pound is likely to rally against the US Dollar, especially given recent general weakness, to around $1.3450. Last month, the Pound had hit a 30-year trough at $1.2798 and has struggled to recover until evidence suggested that the economy was not in the dire straits expected. Earlier this month, the BoE had lowered interest rates and initiated its QE scheme, however investors are now pricing in a 50% likelihood of a smaller rate cut at November’s meeting.