Sterling had one of its best weeks since the Brexit vote back in June 2016. The Bank of England’s interest rate decision came as no surprise to economists. Although they stated that an interest rate hike could happen in the coming months which caused a dramatic rise in Sterling’s value. Everyone will be watching out for a speech on Brexit next week by Prime Minister Theresa May. The next round of Brexit talks with the European Union has been postponed by a week until Sept. 25
European Central Bank Vice President Vítor Constâncio had rather dovish tone on monetary policy in comments last Tuesday. This added to speculation that the central bank will not return to a more hawkish outlook any time in the near future.
The single currency has fallen to its lowest level against Sterling since the first week of August as the Pound has attempted to start a long and difficult fightback.
Sterling was at its highest level against the US dollar since June 2016 on Friday. The US dollar has been much weaker as the concerns over the ultimate costs of natural disasters Hurricane Harvey and Irma come to light. Meanwhile the Pound may stabilise at its new highs should investors continue to speculate on the possibility of a rate hike from the Bank of England later in 2017.
Data for the week ahead:
Mon – EUR – Consumer Price Index
GBP – Governer Carney speech
Wed – EUR – Non-Monetary policy’s ECB meeting
USD – Fed Interest Rate Decision
Thurs – EUR – ECB President Draghi’s speech
Fri – EUR – ECB President Draghi’s speech