.32 as Fed chair race in focus” alt=”Sterling steadies around .32 as Fed chair race in focus” width=”1024″ height=”680″ src=”https://globalrubbermarkets.com/wp-content/uploads/2021/09/sterling-set-for-biggest-weekly-rise-in-six-weeks-risks-lurk.jpg”>LONDON: The British pound steadied to around $1.32 on Monday, with any optimism around progress in Brexit talks being overshadowed by a dollar boosted by speculation about a more hawkish chair of the US Federal Reserve.
British Prime Minister Theresa May said on Monday she was “ambitious and positive” about the country’s future and its negotiations to leave the European Union, describing the talks as being conducted in a “constructive spirit”.
Sterling had recovered from an 11-day low against the dollar on Friday on tentative signs of progress in talks over Britain’s departure from the European Union, after EU leaders said they would begin preparations to move into the second phase of discussions in December.
But after building on those gains in early trade, climbing to $1.3227, the pound later slipped back as attention turned to the nomination of the next Fed chair, despite May’s assurances.
By 1500 GMT it was trading flat on the day at $1.3185, with most analysts saying sterling was largely being driven by the dollar’s moves.
“We’re largely in a Fed mindset at the moment. We’re waiting for clarity,” said Stephen Gallo, European head of strategy at BMO Capital Markets.
In an interview aired on Monday, US President Donald Trump said he would choose a new chair “very shortly”.
Trump said he was still weighing at least three people: Federal Reserve Governor Jerome Powell, current Federal Reserve Chair Janet Yellen and the more hawkish Stanford University economist John Taylor.
Investors are also eyeing third-quarter GDP data for Britain due on Wednesday for clues on the health of the economy and the likelihood of a Bank of England interest rate hike following its next policy meeting on Nov. 2.
Preliminary data is expected to show that GDP grew by 0.3 percent in the third quarter, the same slow quarterly growth as in the previous three months.
A weaker result could dent the chances for a BoE hike next month.
“If the data is particularly weak this week, the market’s going to have its doubts,” said Jane Foley, currency strategist at Rabobank.
Figures on British factory orders released on Monday showed growth slowed to its weakest in almost a year this month, but that had no perceptible impact on sterling.
Against a broadly weaker euro, sterling was up a quarter of a percent at 89.09 pence.
May said on Friday that EU leaders need not be concerned about the current budget plans, that Britain would honour the commitments it had already made as a member of the bloc and that she was optimistic about winning a good Brexit deal.
Source: Brecorder.com
