Sterling’s best week against the US Dollar since March
The pound had a strong close to the week having experienced its biggest weekly gain against the dollar since the end of March, despite the fact that there has been little to no progress in Brexit trade talks. Negotiators have until the end of this month to agree on extending the December deadline, otherwise the likelihood of the transition period that keeps previous rules in place expiring will increase. Britain has already said it will not seek an extension so this outcome already has been proving a worry for market investors.
Friday saw the Bank of England’s executive director for markets say that negative interest rates would not be considered in the near term, and this helped the pound pick up momentum. The UK would be the first country with a negative account deficit to cut to below zero, which in theory would see downward pressure. This statement lent more confidence to the pound as this had been weighing on the currency in recent weeks.
Data on Friday showed that the US labour market had unexpectedly improved in May, but the dollar was on the back foot as it reduced the safe haven demand for the currency. The employment report showed that the jobless rate fell to 13.3% last month from 12.7% in April. This followed additional surveys that showed consumer confidence manufacturing and service industries stabilising.
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