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Sterling’s biggest week since 2009

• Posted by Shyam Gokani in Uncategorised
• July 15, 2016
• No Comments

Expectations of a period of relative domestic political and economic calm kept sterling on course for its best week since 2009 today, although broader risks from last month’s Brexit vote prevented a break past two-week highs above $1.34.

Many analysts have recommended selling any rallies in the pound in anticipation of cuts in Bank of England interest rates and a slowdown in growth in the months ahead, with a number of major banks predicting it will fall to $1.25 or lower.

But the Bank shocked markets – and sent the pound up to 2 percent higher – by stopping short of cutting interest rates on Thursday as it awaits the first numbers on the economy taken since the June 23 referendum.

Added to the swift appointment of new Prime Minister Theresa May and her cabinet, that points to a couple of weeks in which those betting on further weakness could be squeezed in a market already leaning massively against the pound.

In morning trade in London, sterling was up half a percent at $1.3414, having earlier gained as much as 1 percent on the day. It gained 0.3 percent to 83.07 pence per euro.

Friday’s rise put sterling 3.5 percent higher on the week – its largest weekly gain since May 2009. But traders said there would be strong resistance to a break above $1.35.