The pound fell by about 0.3% to $1.34. This happened after a noticeable growth the day before, when it jumped by more than 1%. As a result, the pound still added about 1.2% during the week.
The main reason for the strengthening of the pound earlier was the decision of the Bank of England. The regulator unexpectedly for the markets kept the interest rate unchanged – all members of the committee voted for it. Investors expected that some of them would support the rate cut.
After that, market participants revised their forecasts: now they expect that by the end of the year rates in the UK may increase by about 0.8 percentage points.
At the same time analysts of ING consider such expectations too high. In their opinion, inflation risks are weaker now than a few years ago.
Brent puts pressure on the pound
Additional pressure on the foreign exchange market was exerted by oil prices. The cost of Brent oil remains unstable due to geopolitical tensions, including around Iran and the Strait of Hormuz. Against the background of these factors, the euro remained almost unchanged against the pound, while the dollar strengthened slightly against the euro.
As experts note, in the near future exchange rates will largely depend on the situation in commodity markets and geopolitics, although the policy of the Bank of England continues to support the pound.
