Pound Starts Week Poorly, Bounces Later

The theme of Great Britain’s referendum about leaving the European Union remained a hot topic during the week. While the week had started negative for the currency, the sterling rebounded by the weekend.
The pound had started trading on a weak footing as, according to polls, votes for leaving the EU were having a lead. Yet things have changed after an attack on the pro-EU lawmaker. Now, it looks more probable for Britain to remain in the Union.
Talking about things to change, the Federal Reserve policy announcement made market participants rethink chances for an interest rate hike in the near future. The cautious stance of the Fed members and the downgrade of economic forecasts led to speculations that a rate lift-off is highly unlikely in summer.
The sterling gained on the dollar and the euro but was unable to beat the yen (though trimmed its losses against the Japanese currency). The reason for the yen’s strength was the passiveness of Japan’s central bank and absence of additional monetary easing.
GBP/USD rose from 1.4261 to 1.4362 following the drop to the weekly low of 1.4015. EUR/GBP was up from 0.7879 to 0.7985 but retreated to end trading at 0.7851. GBP/JPY settled at 149.63 after falling from 152.28 to the the multi-year low of 145.47.

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