LONDON: The British pound recovered against the dollar on Monday ahead of key domestic drivers for the currency, including inflation data, a panel discussion from Bank of England Governor Andrew Bailey and finance minister Rishi Sunak’s Spring Statement.
All are set to take place on Wednesday. Annual headline CPI is seen climbing to 5.9%, according to a Reuters poll, which would mark the highest level in thirty years.
“A high inflation print - that should only climb further in April with the energy price cap increase - followed by an announcement on the same day by Chancellor Sunak of a programme tackling the cost-of-living crisis may support sterling this week,” Scotiabank analysts said.
Sunak, who is preparing the budget update, said on Sunday he would help where he could with the current cost-of-living squeeze, but warned that the Ukraine crisis and sanctions on Russia would add to the British economy’s problems.
Against the euro, sterling rose 0.2% to 83.66 pence, its strongest level against the single currency since March 11.
Sterling also rose 0.2% against the dollar to $1.3201 and was on track for its fourth day of gains in five.
The Commodity Futures Trading Commission’s weekly sentiment report, released on Friday, showed speculators’ net bearish bets on the pound rose by $1.3 billion to $2.6 billion ahead of last week’s Bank of England policy announcement, Scotia said.
This marked the biggest bearish bet on sterling since the week of Jan. 14.
Meanwhile, data on the housing market from property website Rightmove showed asking prices for British houses recorded their sharpest monthly jump for this time of year since March 2004.
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