The pound sterling firmed on Tuesday against the dollar and the euro, mainly due to the weakness of these two currencies rather than the British news, which are quite rare until the eagerly awaited meeting of the Bank of England on Thursday.
The Sterling book finally increased by 0.2 % compared to the dollar, to $ 1,3323, supported by the nervousness of the markets which hope for trade agreements between the United States and other countries, likely to reduce the effect of American customs duties, but which may not materialize.
The pound sterling reached its highest level at the end of April for more than three years in the late April in the greenback, the fears concerning the health of the American economy having weighed on the dollar, but it had then retreated in the hope of agreements. The markets are however in the process of reassessing this opinion.
The Sterling book has also been dragged against the euro, which fell 0.2 % to 84.95 pence.
The pair was practically stable at the start of the session, but the single currency then fell after the German conservative leader Friedrich Merz failed to win enough votes in Parliament to become Chancellor, once again plunging the policy of the first European economy in chaos.
Regarding the United Kingdom, attention focused on the Bank of England’s meeting on Thursday. The markets consider that a drop in 25 basic points is practically certain and will focus on any index concerning the projects of political decision -makers for the rest of the year.
“This remains interesting, the markets will be attentive to the indications that will accompany the decision, to the tone used and to the possibility of a vote in favor of a drop of 50 base points,” said Jane Foley, head of the exchange strategy at Rabobank.
The markets are currently counting on at least two new decreases of 25 basis of the BOE this year, in addition to that on Thursday, and believe that a third is quite possible.
These bets are based on forecasts that British growth will be lower this year than expected, partly due to the impact of customs duties, and inflation will slow down. The BOE decision to indicate or not that this is his anticipation could also influence the Sterling book.
The BOE announced Tuesday that its press release and its economic forecasts would be delayed by two minutes and published at 11:02 GMT instead of 11:00 am GMT, due to a minute of silence observed throughout the country to commemorate the 80th anniversary of the Victory Day in Europe (VE).
