The British pound traded within a tight range against the euro and the US dollar on Thursday after erasing some of the gain it posted on Wednesday. Comments made by an official from the Bank of England pushed the British currency higher yesterday, despite lingering concerns about ongoing Brexit negotiations with the European Union.
Bank of England Chief Economist Andy Haldane said in a speech yesterday that he believes interest rates in the United Kingdom should soon be raised to cut back on the stimulus given to the economy over the past year. Haldane, who is viewed as one of the more conservative members of the British central bank when it comes to interest rate hikes, added that he would vote for raising rates before the end of the year.
Risks associated with tightening the monetary policy have pointed in the past months to a possibility of running late on raising interest rates, according to Haldane. However, Bank of England Governor Mark Carney said that he believes the British economy needs no interest rate increase in the short term, especially as the Brexit talks with the European Union continue. Demand for the British currency climbed following Haldaneâs comments before dissipating today.
The British pound failed to rise on the back of positive manufacturing data that was released earlier this morning. The Confederation of British Industry said that industrial trends orders rose to 16 in June from 9 in May, which marks the highest level since 1988. The reading beat analyst estimates of 7, which reflected better than anticipated economic expectations from manufacturing executives in the United Kingdom.
The higher reading, which was compiled from a survey of 464 manufacturers, stemmed from improvements in 13 of the 17 subsectors of the survey. The food, tobacco, and chemical sectors led the gains as firms expected solid production growth in the third quarter. Export orders also rose to reach the highest level in 22 years.
GBP/USD traded at 1.2667 as of 17:15 GMT on Thursday from 1.2682 at 06:45 GMT, the pairâs highest level today. GBP/USD began trading today at 1.2673. EUR/GBP was at 0.8803 from 0.8800 at 16:10 GMT, the weakest level of the day. EUR/GBP started the day at 0.8810.
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