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Sterling retracts after recent gains

• Posted by Shyam Gokani in Uncategorised
• September 23, 2016
• No Comments

Sterling slipped back towards $1.30 today, ending the week in much the same place as it started, with worries over Britain’s exit from the European Union keeping pressure on the currency.

The pound had jumped back over $1.31 yesterday afternoon, after Bank of England policymaker Kristen Forbes said she saw no case for a further cut in interest rates, after the Bank slashed them to a record low of 0.25 percent last month.

It slipped later in the day and continued to struggle this morning, after British Foreign Secretary Boris Johnson said he expected the formal divorce proceedings between Britain and the EU to begin early next year, and that two years may not be needed to negotiate a deal.

The dollar index was slightly lower today, leaving it on track for its worst week in a month after Federal Reserve trimmed its long-term interest rate expectations and the Bank of Japan retooled its monetary policy framework.

In Europe, the focus was on the preliminary Eurozone purchasing managers’ index releases for September. Business activity continued expanding, although at a slower pace. German private sector slowed to a 16-month low and traders said that unless the data surprises considerably there will be limited impact on policy expectations and the single currency.