The British pound headed higher on Monday despite Prime Minister Theresa May’s struggles with Brexit policy that has been plaguing the currency of late. The strengthening was largely due to speculation that the Bank of England will raise interest rates before the end of the year, a prospect whose influence over the sterling seems to be, for the moment, greater than Brexit concerns. May is traveling to Brussels today to meet European Commission chief Jean-Claude Juncker after a deadlock in Brexit talks last week crushed British hopes for positive results relating to trade ties after the breakup.
The pound was up 0.11 percent to $1.3301 as of 11:42 a.m. in London. The euro also eased against the pound, to trade at 0.8872 after hitting a 12-day high earlier in the session.
Inflation data to be released tomorrow is predicted to show that consumer price growth hit a five-year high of 2.8 percent year on year, a solid growth which is fueling speculation about an interest rate hike possibility before the end of 2017. Analysts will also be looking closely at labor market data on Wednesday and retail sales numbers that will be released on Thursday.
Euro Struggles
The euro struggled on Monday after closing last week with the biggest weekly rise in four weeks. Shaking the common currency is the struggle in Catalonia, where leader Carles Puigdemont has missed this morning’s deadline to clarify whether he was declaring independence from Spain. The euro was down 0.18 percent against the dollar, to trade at $1.1801. It also struggled against most of its other primary trading partners including the yen, the Swiss franc, and, of course, the pound.