LONDON, March 22 — The British pound strengthened to a nine-day high against the euro today as it continues to retrace losses seen after the European Central Bank and Bank of England policy decisions in the last two weeks.
The Bank of England hiked its interest rate by 25 basis points on Thursday and signalled a slower pace of tightening, but the pound has outperformed the single currency since the decision.
“Its strength, despite last week’s dovish hike by the BoE, is a reminder that continental Europe faces the same, if not worse pressure from the current energy shock,” ING said.
Against the euro, sterling was trading 0.3 per cent higher at 83.44 pence, EURGBP=D3 its strongest level against the single currency since March 9.
The pound rose 0.2 per cent against the US dollar to US$1.3190. GBP=D3
Focus over the coming days could turn to the UK inflation data and British finance minister Rishi Sunak’s Spring Statement, both scheduled tomorrow.
Sunak, who is preparing the budget update, said today it was more important than ever to take a responsible approach to public finances.
Meanwhile, Commerzbank says Wednesday’s inflation data could move the pound “considerably” if CPI once again exceeds expectations.
“If this was to be the case again tomorrow the BoE rate hike expectations could be fuelled again, allowing sterling to recover somewhat further against EUR,” Commerzbank FX and EM analyst You-Na Park-Heger said. — Reuters
