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Sterling gains support

Sterling gains support

The Pound garnered support on the assumption that the latest labour market data would push the Bank of England slightly closer to a 0.5% rate hike in August. Stronger risk appetite was also a significant factor in underpinning the UK currency and allowing an attempt to break above the 1.2000 mark against the dollar. Bank of England Governor Bailey stated that there was some evidence that supply-chain issues were starting to ease and that the economy is slowing. He reiterated inflation concerns and stated that a 0.5% rate hike would be considered in August, but was not a done deal.

The Euro posted sharp gains at market open yesterday following source reports that the ECB was considering a rate hike of 25 basis points or 50 basis points at this week’s policy meeting. It has also benefited from news that the Nord Stream pipeline may restart exports to Europe, albeit at a reduced capacity

By close of business the Pound traded just above 1.2000 to the dollar and the Euro posted a net advance to near 1.1740.

This morning’s headline UK consumer prices (inflation) rose to a 40-year high of 9.4% for June, above expectations and up from 9.1% last time. The core rate edged lower to 5.8% from 5.9% and the impact was limited with Sterling holding just above 1.2000 against the dollar and the Euro around 1.1740.

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