The Pound Sterling crept higher during trade on Thursday ahead of the eagerly awaited policy meeting from the Bank of England. FX traders will be keen to see if the recent Brexit talks and rising inflation in the UK might alter the pace of interest rate increases over the course of the next year. Analysts and economists have forecast that the Bank of England is likely to wait for some time before they hike rates, a pace considerably slower than their US counterpart, the Federal Reserve. Yesterday, the Fed increased its lending rate to 1.50%, largely as anticipated.
As reported at 11:04 am (GMT) in London, the GBP/USD was trading at $1.3441, a gain of 0.21% and not too far from the session peak of $1.3466; the session trough is set at $1.3398. The EUR/GBP is trading at 0.8801 Pence, down 0.15%; the pair has ranged from a session low of 0.87783 Pence to a peak of 0.88341 Pence.
Brexit Under Consideration
While the Bank of England’s possible outlook can generally be ascertained from fundamental data, it is more difficult when it comes to gauging the future as it relates to the Brexit, says one currency strategist. What markets will be watching for is whether the BoE believes that the Brexit talks have, indeed, progressed to the extent of the European Commission’s most recent assessment. Analysts say that the BoE is certainly more optimistic in terms of the UK economy, but whether they are willing to explicitly acknowledge Brexit developments as constructive remains to be seen.