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Sterling Bounces Slightly

Sterling bounced back from a fall to eight-week lows this morning with dealers citing a weaker dollar, a poll showing Scots still favour remaining in the United Kingdom and signs that EU exit talks will not be triggered for another two weeks.

The pound had sunk to its lowest since mid-January on Tuesday after Prime Minister Theresa May won the last of a series of votes in parliament allowing her to trigger the start of a two-year process to leave the trading bloc.

She opted not to move straight away and signs from the government that Brussels will not be formally notified until the end of the month offered the pound some breathing space.
A poll for The Times showed 57 percent of Scots still want to remain in the UK, soothing some of the nerves around the prospect of another referendum on independence which Edinburgh’s devolved government wants to call when the Brexit talks are concluded.

Unemployment fell to the lowest since 1975 at 4.7% and the forecast was expected at 4.8 percent in January, while growth of average weekly earnings dipped to 2.2 percent from an expected 2.4%.

The dollar was subdued in European trade today, staying range-bound ahead of an expected U.S. Federal Reserve interest rate hike with investors’ eyes peeled for clues on the bank’s future monetary policy.

Fed fund futures price in a more than a 90 percent chance of a rise in rates on Wednesday, and attention is now focused on whether the U.S. central bank is now on course for regular three-monthly rises in the months and years ahead.

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