Pound Sterling rises against USD after Bessent’s appointment as Treasury Secretary
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The Pound Sterling rises as investors expect that the policy-easing cycle of the BoE will be slow and shallow. Investors await speeches from BoE MPC members Dhingra and Lombardelli for fresh interest rate guidance. The US Dollar weakens following the announcement that Donald Trump has chosen Scott Bessent as Treasury Secretary. The Pound Sterling (GBP) bounces back strongly at the start of the week and outperforms its major peers after facing a sharp sell-off on Friday. The British currency declined on Friday after the United Kingdom (UK) Retail Sales contracted at a faster-than-expected pace in October and the flash S&P Global/CIPS Composite Purchasing Managers’ Index (PMI) for November came in below the 50.0 threshold for the first time since October 2023. Monthly Retail Sales declined by 0.7% as retailers reported that shoppers held back on spending ahead of the new government’s first tax and spending budget on Oct. 30, according to the Office for National Statistics (ONS). Meanwhile, the Composite PMI fell below the 50.0 level that separates expansion from contraction as activity in the manufacturing sector declined and the service sector output stagnated. “The first survey on the health of the economy after the Budget makes for gloomy reading”, said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. The major reason for the recovery in the Pound Sterling appears to be firm market expectations that the Bank of England (BoE) could be one of the central banks from Western nations that will follow a more gradual policy-easing path. Traders expect the BoE to leave interest rates unchanged at 4.75% in the December meeting and prices in 75 basis points (bps) cut to 4% by 2025, Reuters reports. In Monday’s session, investors will focus on speeches from BoE Deputy Governor Clare Lombardelli and external policy member Swati Dhingra…
Filed under: News - @ November 25, 2024 8:19 am