The Pound Sterling moved lower against the US Dollar after the greenback strengthened on a rise in US Treasury yields. FX traders appear to be wary of Friday’s release of GDP figures from the UK which, if disappointing, could be the “nail in the coffin” for any more rate increases this year. The Monetary Policy Committee of the Bank of England is due to meet early next month, and the GDP data is the last piece of the puzzle to make the determination for a rate adjustment. Mark Carney, the BoE Governor, hinted last week that the mixed economic data seemed to be an issue for the MPC suggesting a determination would be made at future meetings.
As reported at 10:36 am (GST) in London, the GBP/USD was trading at $1.396, down 0.14%; the pair has ranged from a session trough of $1.3934, while the peak is at $1.4. The EUR/GBP is trading at 0.8752 Pence, a loss of 0.0014%; earlier, the pair had hit a low of 0.87394 Pence while the high is recorded at 0.87514 Pence for the day’s trading session.
Disagreement over Rate Hike Outlook
Despite Mark Carney’s words, some analysts still believe that the Bank of England will push through a rate increase, following in the path of the US Federal Reserve which has taken a tightening stance. One analyst feels that the BoE will look at the UK’s strong labor market which might put upward pressure on UK inflation rates. He says that only a very weak GDP report is likely to mean a postponement in the expected rate hike. Currently, economists are forecasting that the preliminary GDP figures for the first quarter will be unchanged at 0.4%.