AIRLINK 75.25 Decreased By ▼ -0.18 (-0.24%)
BOP 5.11 Increased By ▲ 0.04 (0.79%)
CNERGY 4.60 Decreased By ▼ -0.15 (-3.16%)
DFML 32.53 Increased By ▲ 2.43 (8.07%)
DGKC 90.35 Decreased By ▼ -0.13 (-0.14%)
FCCL 22.98 Increased By ▲ 0.08 (0.35%)
FFBL 33.57 Increased By ▲ 0.62 (1.88%)
FFL 10.04 Decreased By ▼ -0.01 (-0.1%)
GGL 11.05 Decreased By ▼ -0.29 (-2.56%)
HBL 114.90 Increased By ▲ 1.41 (1.24%)
HUBC 137.34 Increased By ▲ 0.83 (0.61%)
HUMNL 9.53 Decreased By ▼ -0.37 (-3.74%)
KEL 4.66 No Change ▼ 0.00 (0%)
KOSM 4.70 Increased By ▲ 0.01 (0.21%)
MLCF 40.54 Decreased By ▼ -0.56 (-1.36%)
OGDC 139.75 Increased By ▲ 4.95 (3.67%)
PAEL 27.65 Increased By ▲ 0.04 (0.14%)
PIAA 24.40 Decreased By ▼ -1.07 (-4.2%)
PIBTL 6.92 No Change ▼ 0.00 (0%)
PPL 125.30 Increased By ▲ 0.85 (0.68%)
PRL 27.55 Increased By ▲ 0.15 (0.55%)
PTC 14.15 Decreased By ▼ -0.35 (-2.41%)
SEARL 61.85 Increased By ▲ 1.65 (2.74%)
SNGP 72.98 Increased By ▲ 2.43 (3.44%)
SSGC 10.59 Increased By ▲ 0.03 (0.28%)
TELE 8.78 Decreased By ▼ -0.11 (-1.24%)
TPLP 11.73 Decreased By ▼ -0.05 (-0.42%)
TRG 66.60 Decreased By ▼ -1.06 (-1.57%)
UNITY 25.15 Decreased By ▼ -0.02 (-0.08%)
WTL 1.44 Decreased By ▼ -0.04 (-2.7%)
BR100 7,806 Increased By 81.8 (1.06%)
BR30 25,828 Increased By 227.1 (0.89%)
KSE100 74,531 Increased By 732.1 (0.99%)
KSE30 23,954 Increased By 330.7 (1.4%)

LONDON: Sterling strengthened a touch against the dollar and euro on Monday as traders grappled with the implications of the previous week’s outsized rate hike by the Bank of England.

The pound rose 0.15% against the dollar to $1.2735, regaining some of its 0.83% loss from the week before, the currency’s biggest weekly decline since mid May.

It also firmed against the euro, which was down 0.13% at 85.54 pence, as soft German business sentiment data weighed on the European common currency.

Sterling clobbered as jumbo rate hike raises risk of recession

Monday’s moves in sterling were in the shadow of the Bank of England’s larger-than-expected 50 basis point interest rate hike, which pushed market pricing for the peak in the Britain’s key interest rate over 6%, implying a further over 100 basis points of tightening.

In contrast, markets expect other major central banks to be near if not at their rate peaks.

Traders are trying to assess whether this should mean a stronger pound - typically currencies benefit from higher rates compared to peers - or whether the ramifications for economic growth in Britain mean the pound will weaken.

“Price action points to (sterling) being at an inflection point at which further rates hikes are no longer bullish for the currency,” said BNP Paribas analysts in a note.

The pound also hit a fresh seven-and-a-half year high against the under-pressure Japanese yen, reaching 182.98 yen before retreating after Japan’s top currency diplomat stepped up warnings against recent yen weakening.

Speeches by several BOE policy makers will be closely watched this week, most notably governor Andrew Bailey who speaks on Wednesday on a panel with top central bankers from the European Central Bank, Federal Reserve and Bank of Japan.

Comments

Comments are closed.