Sterling bulls cautious after BoE hold
Sterling rose to a 2024 high at 1.3314 in early NorAm after the BoE, as expected, held rates steady, adding to GBP/USD strength amid diverging U.S. and UK rate spreads, which is likely to push cable higher still.
STIR futures are discounting further rate divergence in 2024 and 2025, though sterling's post-BoE rise was quickly dialed back after a surprise drop in weekly U.S. jobless claims.
Still, the BoE is expected to cut more slowly than the Fed, which should support the pound.
The resistance to a more protracted rate-based slide in the dollar has come from more hawkish Fed rate expectations, relative to recent futures pricing in 2025, based on the dot-plot projections released Wednesday.
However, traders will probably take those forecasts with a grain of salt.
SOFR futures are anchored in the low 3% area in 2027 and beyond, with SONIA futures a touch higher, which implies the UK rate advantage will remain intact and continue to support sterling.
For more click on FXBUZ
GBP Chart: https://tmsnrt.rs/3TXXpIX
(Paul Spirgel is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
