Pound awaits vote in parliament, data and meeting of the Bank of England

Traders who have made bullish stakes on the pound may feel nervous this week, as the sterling is going to have a thorny path against the backdrop of news flow, from Brexit to the Bank of England. Last week, the sterling boasted its biggest weekly growth against the dollar since June, winning from a wide fall of the dollar after the “pigeon” comments from the representatives of the Federal Reserve and amid tensions in US relations with North Korea. This week the pound is waiting for a vote on the bill on the withdrawal of the UK from the EU in Parliament on Monday, inflation data on Tuesday and the decision on the rate of the Bank of England on September 14. The opposition Labor Party hopes to block a bill aimed at giving the force of law in Britain to the legislation of the European Union. Prime Minister Teresa Mei expects to receive the support of the Democratic Unionist Party and the faithfulness of her own party in order to hold the document through the parliament. Seven MPs from the Conservative Party of May should vote against this bill. “Delays in adopting the law are likely to put pressure on the pound,” said ABN Amro Bank NV analyst Georgette Boulet. “The soft exit of the UK from the EU will be positive, but the prospect of not committing a deal is a terrible scenario,” she added.
The pound has proved that it is immune to bad data in recent weeks, so the inflation figures and the September 13 unemployment report are not on the top of the traders agenda. Nevertheless, the pound has the opportunity to react positively in case of good data output. “If the inflation figures exceed expectations, and the employment report will match the consensus, the pound sterling should continue to rise towards the dollar, and also slightly adjust to the euro,” she said. The pound broke up $ 1.32, rising to a five-week high against the dollar on Friday, gaining almost 2 percent for the week. Against the euro, it rose to a two-week high – 91.10 pence for the euro. BOE will not raise the rate this week, so investors will look at the tone of its statements to determine further prospects, said BMO Capital Markets strategist Stephen Gallo. A new member of the Central Bank, David Ramsden, who joined the politicians of the monetary policy committee on September 4, is expected to adhere to the “pigeon line” and, according to analysts, will vote against raising rates. However, despite the intense agenda for the pound, the real story this week is the continued weakness of the dollar, Gallo said. “I would characterize the pound as being forced to grow,” Gallo said. “Fundamentals have not changed,” he added.

Leave a Reply

Your email address will not be published. Required fields are marked *