The pound sterling operated without major changes against the euro and the dollar and fell hard in front of the yen, as investors focused their attention on economic data and central banks’ monetary policy meetings later this week.
He index dollar —which measures the performance of the greenback relative to a basket of six other internationally relevant currencies—fell 0.28% to 107.15.
Meanwhile, the pound rose in front of dollar on Friday after the US president donald trump suggested a potentially softer tariff stance. However, some concerns about US trade policy resurfaced on Monday after USA and Colombia back from the brink of a trade war.
Analysts expect investors to shift their attention from the US administration’s strategy, at least temporarily, to so-called monetary policy divergence ahead of a series of central bank policy meetings.
Waiting for central bank meetings
Decisions on interest rates European Central Bank and of the Federal Reserve (Fed) will be announced on Wednesday and Thursday, respectively.
Analysts also told Reuters that the decision of the Fed to keep rates unchanged and the ECB cuts by 25 basis points are well priced, but traders will focus on any suggestions about the outlook for rates.
The governor of Bank of Japan, Kazuo Ueda said last week that the BoJ will continue to raise interest rates as wage and price increases widen, while central banks around the world, including the Bank of England, are easing policy.
Some analysts argued that the aggressive tone of the Boxwood It could reflect policymakers’ desire not to do anything that could weaken the yen and therefore potentially upset Trump.
The pound sterling fell 0.94% to 192.82 against the yen, after previously reaching 192.51. On Friday it rose 1.03%.
Inflation figures will be published on Friday. Japan, Germany and France, while the nation’s favorite inflation indicator Fed will be published in USA. BofA currency strategists said the market is taking a “glass half empty stance” on the UK.
“We remain constructive regarding the pound sterling, “as we believe sentiment is asymmetrically skewed and much of the bad news is already priced in, although we recognize that downside risks have increased,” they said in a note to clients.
Source: Ambito
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