Pound Pinned Near $1.42, Address By BoE Quartet Awaited

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Britain’s pound held in a tight range on Monday, trading just shy of $1.42 as analysts set their eyes on an address by four policymakers from the Bank of England to a parliamentary sub-committee.

Gains in recent weeks have brought the pound back within touching distance of a nearly three-year high of $1.4240 against the dollar, a level it hit in February this year.

Bets that Britain’s COVID-19 vaccine rollout would facilitate a quicker reopening of its economy have kept those gains intact, and have left sterling the second best performing G10 currency against the dollar this year, trailing only the commodity-driven Canadian dollar.

After three national lockdowns, Britain has been able to reopen its economy according to the government’s planned schedule so far, although concerns remain about the variant of the coronavirus first discovered in India.

Economic data has also been encouraging for the pound’s outlook, with strong retail sales and surveys of purchasing managers beating consensus forecasts.

By 0800 GMT, sterling was 0.1% higher on the day at $1.4167 and flat to the euro at 86.08 pence.

“GBP is holding onto recent gains well. Recent reports suggest vaccines are effective on the Indian variant and that the UK economy is still on track for a full re-opening on June 21st,” said ING in a note to clients.

BoE governor Andrew Bailey and outgoing chief economist Andrew Haldane will address a Treasury Select Committee of the UK parliament at 1430 GMT, joined by fellow policymakers Michael Saunders and Sir Jon Cunliffe.

“Typically we have seen the BoE a little more upbeat on UK recovery prospects than the market, suggesting GBP should stay supported,” ING said.

The strategists added that they saw a window for the pound to punch above the $1.4235 resistance level this week.

– Reuters

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