Sterling consolidated gains today as the market geared up for a rate rise from the Bank of England this week when investors will analyse the bank’s statement for the future direction of interest rates.
With continued Brexit uncertainty and a mixed bag of results for the British economy, the expected rate hike is likely to be a one-off move, analysts said, rather than the start of a fully-fledged tightening cycle.
If there is no hike – which is completely possible – the pound will be sold off, it would plummet.
The most likely scenario is a rate hike and it should have limited upside as this is priced in, especially if it’s a one-off scenario.
Sources we work close to are suggesting that the vote will be a 6-3 in favour of a rate hike.
The dollar slipped to an 11-day low today, with investors turning cautious after news that investigators probing Russian interference in last year’s U.S. elections had charged President Donald Trump’s former campaign manager.
Against a basket of major currencies, the dollar also slipped, having fallen from its highest in three months at the end of last week.