British Pound Hovers Around $1.35 Ahead of UK Data
The British pound stabilised above $1.35, recovering from a two-week low, as investors prepare for a week filled with significant economic data and global interest rate decisions while also monitoring US-Iran peace talks.
Last week, the dollar declined against all G10 currencies but recovered from its lowest point towards the end of trading. After a rally last month, the dollar has reversed a significant portion of those gains.
With hopes that the conflict in the Middle East might be resolved, risk appetite increased, putting downward pressure on the dollar. Hence, the Dollar Index fell for the third consecutive week, marking its longest losing streak in a year.
Currently, the US Fed funds futures market indicates nearly a 65% probability of an interest rate cut before the year’s end, the highest likelihood in a month.
The market anticipates that the Bank of England will maintain key rate at 3.75% amid the ongoing crisis in the Middle East, with analysts predicting a near-unanimous decision to keep rates unchanged.
This follows last week’s UK inflation report, which revealed a consumer price index of 3.3% year-over-year, a surge driven by rising fuel prices.
As a result, markets are now anticipating at least two interest rate hikes this year, an increase from the previously expected one, with the possibility of a third hike under consideration.
In UK, political uncertainty is also growing ahead of the local elections on May 7, with Prime Minister Keir Starmer facing criticism for appointing Peter Mandelson as US Ambassador.
Energy, Commercial Stocks Drag Nairobi All-Share Index Lower
