The pound has been fluctuating over the last day on the back of a negative dip due to Brexit negotiation uncertainty, a neutral reaction to the Queen’s Speech and then a boost from the Bank of England’s Chief Economist Andy Haldane’s comments that interest rates may rise in the second half of the year.
Brexit and the pound
It’s really been the word on many people’s minds since the referendum was called by the Conservative government back in 2015. Whether for or against it, Brexit has truly entered the British lexicon. But the uncertainty it’s generated has done Sterling no favours.
Since the announcement of the referendum result, the pound has been slowly but steadily losing ground to the euro.
The Queen’s Speech
While full of bill proposals, many analysts were concerned about the lack of solid information in the Queen’s Speech. Both Labour and the Scottish National Party questioned what the ‘best deal for Britain’ meant, calling it a worn-out phrase.
The pound didn’t really react to the Queen’s Speech, as there wasn’t much to react to.
Bank of England and interest rates
The BoE chose not to increase interest rates, despite the announcement that inflation had spiked and overtaken average wage growth. While several on the council voted for an increase, the majority didn’t, with its governor Mark Carney saying that now wasn’t the time.
Chief Economist Andy Haldane put some life back into the pound when he said interest rates could rise in the second half of the year.
What does all this mean?
Basically, not much – The pound is reacting to new announcements and reports, just as all currencies do. The difference is, its volatility means traders are keeping a wary eye on it. The uncertainty surrounding Sterling means there’s no set trend to monitor.
News and trends are one of the driving forces behind when traders choose to trade, and when they know not to.
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