Sterling hits 10 month high
Mihir Kapadia – CEO and Founder of Sun Global Investments, writes on the latest.
Sterling hit a 10 month high yesterday, as investors anticipate this week's Bank of England "Super Thursday" for a steer on whether record-low interest rates could soon be lifted for the first time in more than a decade. The pound has recently been supported by expectations that the bank might finally be ready for a hike further to a series of hawkish comments from policymakers, although Governor Mark Carney and most of his top officials seem set to remain in wait-and-see mode.
Data already indicates Britain's housing market lost a small amount of momentum last month, as mortgage approvals dropped to a nine-month low and unsecured lending growth slowed further, which had little impact on the currency.
The numbers added to a run of weak data which, along with deep uncertainty about the impact of Brexit on the economy, have cooled the speculation that the BoE is poised to start removing its crisis-level stimulus. Sterling has now recovered almost half of its post-Brexit-vote falls against the dollar, down 12 per cent compared with as much as 23.5 per cent during a "flash crash" in October.
We do not expect a rate increase especially as Kirstin Forbes who was one of the three members who voted for a rate increase last time is longer a member of the MPC.