Pound Stable amid Argument About Chances of BoE Rate Hike

The Great Britain pound was mostly stable today as market analysts argued whether the outlook for monetary tightening from the Bank of England is warranted considering the Brexit uncertainties.

Some analysts were encouraged by recent macroeconomic data. They claimed that the BoE will hike interest rates, perhaps as soon as the next month.

Others were not so certain and thought that any gains of the pound should be considered as a good selling opportunity. They pointed out that no progress in Brexit talks between Great Britain and the European Union means that there likely will be no deal, which would hurt economic ties between the United Kingdom and the rest of Europe. Indeed, Chancellor Philip Hammond said that the government should be prepared for such an outcome:

I am clear we have to be prepared for a ‘no deal’ scenario unless and until we have clear evidence that this is not where we will end up.

That means currently it is not a good time for the central bank to start reducing monetary stimulus.

GBP/USD traded at about the opening level of 1.3202 as of 17:21 GMT today after falling to the low of 1.3175 earlier. EUR/GBP was up from 0.8941 to 0.8968. GBP/JPY was at its opening of 148.43 following the drop to 147.82.

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