Pound Struggling after Data
The Pound Sterling continued to struggle and is still trading close to a 2-year trough despite unexpectedly improved growth data. Analysts say that FX traders are concerned that a no-deal Brexit is becoming a stronger possibility under the next prime minister. Moreover, despite the latest data, all signs point to a weakening UK economy which could force the Bank of England to shift its hawkish positioning to dovish, generally in line with the rest of the major central banks. Earlier, the Office of National Statistics reported that overall output for the 3-month period through May improved unexpectedly to 0.3%, above the 0.1% that had been predicted; The previous reading was also revised upward to 0.3% from 0.2%.
As reported at 11;16 am (GMT) in London, the GBP/USD was trading at $1.2483, a gain of 0.1669%; the pair has ranged from a trough of $1.2444 to a peak of $1.2495 in today's session. The EUR/GBP was trading at 0.8988 Pence, a loss of 0.0578% and off the earlier low of 0.89840 Pence.
Traders Bet on BoE Policy Shift
Markets are now pricing in a policy shift for the Bank of England, with lower rates expected within 12 months. Analysts say that the US-China trade rift, which still has no clear signs of ending, is having repercussions on a global scale and the impact to the British economy, especially given the anticipated fallout from a hard Brexit, will force the BoE to rethink its strategy.