Sterling holds at more than 2-week highs as economic outlook darkens rate view (updated)
26/07/2022 16:12
(Updates prices)
LONDON, July 26 (Reuters) - Sterling consolidated at more
than two-week highs on Tuesday but remained within recent
trading ranges as analysts assessed the prospect of a 50 basis
point rate hike by the Bank of England against the backdrop of a
worsening economic outlook.
The BoE will likely shy away from such a large interest rate
rise in August and stick with the more modest 25 bps increases
it has been delivering, but it is a close call, a Reuters poll
of economists found. urn:newsml:reuters.com:*:nL8N2Z32TR
"BoE is priced for tightening like the Fed but with a far
worse economic outlook than the United States," said Francesco
Pesole, a strategist at ING Bank in London.
"The worsening economic outlook will push the BOE to hold a
less hawkish stance."
Against the U.S. dollar, the pound GBP=D3 touched its
highest level since early July at $1.2090 as it moved from a
March 2020 low of below $1.18 revisited this month. It was
trading around $1.2052 in late London trading.
Versus the struggling euro EURGBP=D3 , the British unit
gained to 84.11 pence.
Latest positioning data show investors have consolidated
their bearish bets on the pound at $4.3 billion, not far from a
near two-year peak of $6.2 billion in May. GBPNETUSD=
Market sentiment was also cautious ahead of a two-day
Federal Reserve meeting on Wednesday, when investors widely
expect the Fed to raise interest rates by another 75 bps.
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Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
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(Reporting by Saikat Chatterjee; Additional reporting by Sujata
Rao; Editing by Barbara Lewis and Gareth Jones)
((saikat.chatterjee@thomsonreuters.com; +44-20-7542-1713;
Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))