Not so smooth sailing for sterling

Niki Sehmbi22nd June 2021

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Good morning,

Following a change in tack from the Federal Reserve and mention of a more hawkish approach to their fiscal policy, last week saw some significant losses on the GBPUSD rate. Having said that, yesterday saw some improved sentiment for the pound sterling, and with it a slight recovery against both the dollar and the euro with the GBPUSD rate having crept back up with a near 1% gain, trading in the 1.3930 region at time of writing. The GBPEUR rate has also seen some slight recovery, stabilising back in the 1.1660’s.

However, this being said, the pounds’ future is still uncertain. The headway made in early vaccinations and sheer number of vaccinations is now being rivalled by US and European counterparts. This paired with increasing uncertainty surrounding the fourth stage of lockdown being delayed and an increase in cases of the highly transmissible Delta variant of Covid-19 makes for a bumpy ride for the pound.

For now, focus remains on the Bank of England’s Monetary Policy Committee meeting tabled for Thursday where a decision will be made on whether we will see a rate hike in 2022, although analysts predict that this is more likely on the cards for Q1 2023.

Have a great day.

Holly Tobia-Parkyn, Relationship Manager.

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