LONDON: The pound edged up on Friday, set for a third weekly gain versus the dollar, ahead of major US jobs data, as a steadier oil price encouraged investors to dip into more volatile currencies like sterling.
With peace talks between the United States and Iran stalled and, in the absence of another round of hostilities, Brent crude futures held around USD95 a barrel.
The pound, along with the Australian and New Zealand dollars, got a boost from improved investor risk appetite, as well as from a Bank of England survey that suggested British businesses expect to raise prices less quickly in the year ahead then they did in April, as some of the initial energy price shock caused by the Iran war fades.
Sterling, which has edged up 0.1 percent so far this week against the dollar, was up 0.3 percent at USD1.346. The euro was a touch weaker against the pound, drifting 0.1 percent to 0.8639 pounds.
“This all helps cement another “on hold” decision from the Bank of England later this month. We know officials put a lot of faith in this survey. And it also questions the need to hike interest rates in general,” ING strategists said in a note.
Money markets show traders expect no move from the BoE when it meets later this month, with the first rate hike expected around September and a roughly 50 percent chance of a second by year-end.
A rate hike would normally boost the appeal of a currency, but with UK growth faltering and inflation picking up, higher borrowing costs stand to hurt the consumer and businesses.
On the data front, British house prices unexpectedly fell by 0.1 percent in May, leaving them 0.5 percent higher than a year earlier, data from mortgage lender Halifax showed on Friday.
The median forecast in a Reuters poll of economists had predicted a monthly house price rise of 0.1 percent and an annual rise of 1.0 percent.
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