Last week saw the pound rise to six-day highs after Thursdays Bank of England meeting reinforced expectations of a further rate hike this year and possibly as early as August. Although policy makers did opt to keep rates on hold at 0.5%, the bank’s chief economist unexpectedly voted for an interest rate hike which forced the GBP higher. This positive interest rate sentiment was further compounded by broad based dollar weakness on Friday, allowing the GBP/USD to surge 0.5% on the day to touch 6 day highs of 1.3312 in early European trading.
In what is a continuation of a challenging month for the British currency, the pound did surrender most of these gains throughout the day on Friday falling to levels closer to 1.3260 and 87.75 against it’s US and EUR counterparts. Worries of an economic slowdown and further uncertainty British diplomats ability to secure a favourable Brexit deal with the European union continue to weigh on the pound. In light of the recent BOE policy meeting, markets will now be closely watching domestic macroeconomic datasets for any indication of an uptick in the domestic economy to cement an August rate hike which could provide some upside for the pound in the near term.
At the time of writing the pound is currently trading at 0.5614 against the Australian dollar, 1.0761 against the NZD and 0.6378 against the Euro.