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coronavirus
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VERY HIGH
Source: covid.gov.pk
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1524hr
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5,19624hr
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Islamabad
120,813
KPK
186,537

The pound was unchanged on Tuesday within striking distance of five-week lows touched last week against the dollar and euro, as fading rate hike expectations continued to weigh on sentiment.

Sterling fell sharply after the Bank of England surprised the market by leaving interest rates unchanged last week, while investors bet that policymakers will keep rates on hold for now.

ING analysts expect more subdued trading into Thursday's release of UK 3Q GDP data. Still, they suspect that "a broad 1.34-1.38 range will last into year-end and that the speculative community did not have enough conviction for driving it below the September support levels."

The pound flatlined against the dollar by 0820 GMT at $1.357, off a $1.3425 five-week low hit on Friday. Versus the euro, it was at 85.4 pence.

According to Unicredit analysts, the sterling "needs to break fully beyond 1.36 (against the dollar) to convince markets to return long ahead of the mid-December BoE meeting."

Markets are assigning an around 50% probability of a rate hike in December, while before the BoE meeting, they had priced two rate hikes by year-end.

"What surprised us from the BoE last week was the strength of their dovish tone. It wasn't only that they didn't hike, they were also dovish about future hikes," BofA analysts said in a research note.

They added that their "proprietary BoE mood indicator, based on natural language processing of BoE minutes and which we update here, backs up our subjective impression. It fell back to the least hawkish since May."

The Bank of England will have to act if it sees expectations of higher inflation pushing up wages, BoE Governor Andrew Bailey said on Monday.

A potential new spat with Ireland about the post-Brexit trade deal added some pressure to the pound.

Ireland said on Sunday the British government appears ready to invoke unilateral emergency provisions in its Brexit deal governing Northern Ireland's trading arrangements.

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