Home›Forex›Major Pairs›Pound firms as fiscal expectations boost risk sentiment

Pound firms as fiscal expectations boost risk sentiment

MUFG said the GBP strengthened on expectations of sound UK public finances, alongside stronger-than-expected GDP, even as markets price more Bank of England rate hikes.

Reported · Written up by our desk · Major Pairs

The British pound has risen sharply, with MUFG pointing to reports that Shabana Mahmood is set to become the next UK chancellor as a key driver. The bank said the update reduced perceived UK fiscal and political risk ahead of the Prime Minister in-waiting, Andy Burnham, improving sentiment toward sterling.

FXStreet noted that the pound’s outperformance has also been supported by stronger-than-expected UK GDP data. MUFG added that this strength has held up even as markets are already fully pricing in further Bank of England rate hikes.

In FX trading, GBP/USD reportedly fell to 1.3500 after mixed UK data, suggesting the currency has been volatile around incoming macro releases. FXStreet also flagged that EUR/USD was consolidating above 1.1450 ahead of the next batch of US data.

Latest closeEUR/USD 1.147 ▲0.8%|GBP/USD 1.354 ▲1.4%

More like this

Sources