- Posted by currencies in Rate Alerts
- May 17, 2023
- No Comments
The pound slipped against a strengthening dollar on Wednesday and maintained its losses after Bank of England Governor Andrew Bailey reiterated, he expected price pressures to ease, as soon as April.
Speaking at the British Chambers of Commerce Global Annual Conference, Bailey said that if price pressures were to be more persistent, further tightening of policy may be required, but added there were signs the labour market was loosening a little.
On Tuesday, data showed Britain’s jobless rate rose to 3.9%, while the rate of increase in total pay, including bonuses, held steady, prompting some investors to scale back their bets on further interest rate hikes.
Traders price in around a two-in-three chance of a 25 basis point hike at the June meeting, with around a one-in-three chance they remain on hold.
Much will depend on the strength of future data, with next week’s April inflation print a key input.
The dollar rose on Wednesday, benefiting from its status as a safe haven amid the risk of a U.S. debt default and as traders trimmed bets on imminent Federal Reserve rate cuts following solid consumer spending data in the United States.
U.S. President Joe Biden and the senior congressman, Republican Kevin McCarthy, have edged closer to a deal to raise the U.S. debt ceiling – but nothing is clinched yet.
While Biden said that any default would land the economy in recession, investors fear the impact globally would be negative, and consequently see the greenback as a safe haven.
GBP/EUR 1.1484 GBP/USD 1.2454 GBP/AED 4.5641
GBP/AUD 1.8703 GBP/CHF 1.1197 GBP/CAD 1.6794
GBP/NZD 1.9902 EUR/USD 1.0827 GBP/ZAR 23.811