Sterling climbed for a third day today, but traded in tight ranges as investors waited for new developments on Britain’s shock decision to leave the European Union, which sent the currency to a 31-year low.
The pound tumbled almost 8 percent last Friday, the steepest daily decline in the post-1973 floating-exchange-rate era, after the result of Britain’s referendum on EU membership stunned markets. Those losses continued into Monday, with sterling shedding another 3 percent and markets firmly in risk-off mode.
But sterling has recovered almost 2 percent in the past three days against the dollar.
Investors were drawing some reassurance from the fact that British politicians were not rushing to trigger the Article 50 mechanism for a state to leave the EU, despite European leaders telling Britain to act quickly after last week’s referendum.
Data showing just how big Britain’s hefty current account deficit is will be closely watched when it is published today, along with final gross domestic product data. One of the reasons investors had been so worried about a Brexit was that it could put at risk the large investment flows Britain relies on just to fund that deficit.
Bank of England Governor Mark Carney will be watched for clues on interest rates, when he gives policy guidance at 1500 GMT – his second speech since the Brexit vote.