Pound Holds Steady Ahead of Key Economic and Political Data
The pound remained stable near a one-year high against the dollar, with traders cautious before significant political and economic data releases this week. Key events include British inflation data, King Charles announcing the new government's legislative agenda, and upcoming jobs data. Market reactions and BoE decisions hang in balance.
![Pound Holds Steady Ahead of Key Economic and Political Data](https://devdiscourse.blob.core.windows.net/aiimagegallery/04_07_2024_08_46_22_8685629.png)
- Country:
- United Kingdom
The pound remained stable on Tuesday, just below a one-year high against the dollar achieved the previous day, as traders held their breath awaiting major political and economic data due later in the week. British inflation data for June, due Wednesday, is expected to guide expectations on whether the Bank of England will cut rates at its August meeting or delay until later in the year.
Additionally, on Wednesday, King Charles will unveil the full legislative agenda of the new government under Prime Minister Keir Starmer. The week will further see critical jobs data on Thursday, also pertinent for the BoE's future actions.
'The UK is the market to watch this week by some margin. You've got all the data, you've got the King's Speech, and the key point of interest is that BoE expectations are pretty much 50/50, so the data could certainly sway outcomes,' stated Colin Asher, senior economist at Mizuho. Investors displayed caution, opting not to place large bets ahead of the week's data, keeping sterling steady at $1.2969 against the dollar, slightly off the previous day's one-year high of $1.2995.
Sterling also remained steady against the euro, with one euro at 84.04 pence, after dipping to a nearly two-year low of 83.91 pence on Monday. Positive British economic data and hawkish BoE policymakers have supported the pound, while decelerating inflation in the U.S. pressured the dollar and political uncertainty in France weighed on the euro.
The BoE's June decision to keep rates unchanged saw a 7-2 vote, with policy minutes revealing a 'finely balanced' perspective among rate setters.
(With inputs from agencies.)
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