Pound to fall as rates stay on hold

12 July, 2018

With all the uncertainty surrounding the UK at the moment such as political instability as well as the current Brexit negotiations that seem to be dragging on forever, many are starting to wonder just how is the British pound holding up in the face of such problems.

A challenge to British Prime Minister Theresa Mays leadership is possible over the next 2 weeks as her own party revolt over her handling of Brexit which the Pound sterling has seemed to have brushed off but the next big round of news may be just too much for the British currency to handle.

The news is the growing expectations that the Bank of England will raise interest rates next month which is currently factored into the pound and may be the reason it has managed to remain above $1.30.

One analyst believes that the market has got it all wrong and with all the factors mentioned above as well as many others, the BOE will have no choice but to leave rates on hold out of fear of derailing the economy even further and the first rate hike may not come until 2020.

If the central bank does leave rates on hold next month the pound sterling is bound to take a big hit.

"The market thinks the Bank of England will hike once this year and once next year. We think that is wrong. In this uncertain environment with potentially a fall in the government, we don't think the Bank of England can hike rates." Said Alberto Gallo, a portfolio manager at Algebris Investments

"We think the Bank of England could go on hold rather like the European Central Bank has done, rather than continuing to hike one or two times over the next two years," he says. He added.

The short term focus for the pound will be a speech later today by Bank of England Governor Mark Carney where he will lay out the case for monetary policy moving forward.


Source link  
Aussie dollar up on Chinese data

The Australian dollar remains firmly above the US70c mark in today’s trading session after a strong round of data out of China alleviated...

Pound may hit $1.37 by years end

The British pound is expected to face increased volatility over the coming months as the deadline approaches for the UK to leave the EU at the end...

Has the US dollar peaked?

The US dollar has made significant gains against all the major currencies over the last month as worries over trade tensions between...


Pound may suffer in the long term

The British pound continues to power ahead in today's trading session after yesterday's developments in the British parliament that many see as ending...

Gold needs to remain above $1300

The gold price has staged a substantial rally since last week after the US Federal Reserve latest board meeting where they stated that any move...

Only way for oil is down

The oil price has now broken down through the all important $50 mark, which is a physiological blow to any chance of a rally, and according to...


D-Day for the pound

Traders and Fund managers alike are expected to be glued to their desk on Tuesday evening UK time as the British parliament vote on the Brexit Deal put before them...

Will gold's rally continue?

After spending the majority of November range bound, the gold price has finally broken out to the upside as investors seek out safe havens from the anticipated...

Dollar could weaken for years

The US dollar has been the star performer in the currency markets this year, gaining solidly against all the major currency but some are beginning...

  


Share it on:   or