Pounds gains may be limited

The British pound made a run for the $1.30 mark against its US counterpart today, before pulling back late in the session and some believe it may be difficult to break through this level.

At 5.06pm (GMT) the British currency was trading at $1.2938, virtually unchanged from yesterday’s trading.

The local currency has been on a winning streak ever since British Prime minister Theresa May called snap elections, as investors warmed to the idea of a more stable government that would have bigger numbers to push through their agenda.

Lloyds bank believes further gains in the pound may be limited against the US dollar as the US Federal Reserve prepares to raise interest rates, while the uncertainty of Brexit negotiations is also likely to take a toll,

“We believe there may be room for further appreciation, particularly if the election result is seen as strengthening the hand of the PM in the upcoming Brexit negotiations. But we are mindful that uncertainty around the talks, coupled with the prospect of a rise in US interest rates next month, could limit the upside,” noted analysts from Lloyds bank.

Volatility is expected in the pound tomorrow when the Bank of England releases its latest interest rate decision and no changes are expected from the current 0.25 percent.

The following monetary statement is expected to generate a lot of interest with some predicting that the BOE may set the stage for rate hikes later in the year,

“The market may even get excited about tomorrow’s MPC meeting,” said Kit Juckes, strategist at Societe Generale SA,

“Pricing of a rate hike at that meeting is still tiny, as indeed is the case for the next three meetings, but any hint of a hawkish bias in MPC comments can be latched onto.”


Pounds gains may be limited


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