LONDON: The pound edged higher on Monday, breaking a three-week losing streak versus the broadly struggling US dollar as hawkish comments from policymakers supported the currency.
While the Bank of England raised interest rates by just a quarter point last week - lagging more robust action from the US Federal Reserve and other central banks, markets are putting a 80% chance on a half-point rise in July and expect almost 100 basis points of tightening by September.
The BoE’s new message that it may have to act “forcefully” on interest rates is not unconditional and depends on the persistence of inflation pressures, the central bank’s chief economist said on Friday.
“A number of factors point to pound weakness at the moment but supported Bank of England rate expectations have provided a floor for now, and the pound is stabilising at the centre of the 1.20-1.25 area,” ING strategists said in a note.
Sterling heads for third week of losses as dollar stands tall
Against the US dollar, the pound is up 0.1% at $1.2236 after three consecutive weeks of losses. It fell to a March 2020 low of $1.1934 last week.
Net short pound positions fell for a third consecutive week, according to latest positioning data as some traders have cut back on their bearish pound bets.
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