EU Summit could hurt the Pound
- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- June 26, 2018
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Sterling edged higher from the day’s lows on the back of a weaker dollar as worries about rising trade tensions between the United States and other leading economies kept risk appetite in check.
Sterling gains were limited before a crucial EU summit this week as investors booked profits from a short rally after a Bank of England meeting last week revived expectations of a rate hike in the coming months.
Markets now see more than a 50 percent likelihood of the BoE raising interest rates in August by 25 basis points and a 90 percent chance of a rate hike happening by the end of 2018.
However, the EU summit on June 28-29 at which Britain is hoping to make progress in securing a favourable Brexit deal with the EU could hurt Sterling.
Prime Minister Theresa May is struggling to find a proposal on post-Brexit customs arrangements – the biggest stumbling block so far in exit talks – to take into negotiations with Brussels.
GDP data for the first quarter on Friday will also give some indication on how the economy is faring.
Nine months before Britain’s exit from the EU, the country seems to be trapped in a period of relatively low growth.
In the first quarter of 2018, the economy is expected to have grown by just 0.1 percent, the slowest rate since 2012 and matching growth rates in the previous quarter.
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