Sterling holds above $1.28, unchanged as investors wait for political moves

Friday,   08-Nov-2019   03:50 PM (IST)

Sterling was little changed on Friday, holding just above $1.28 and recovering from two-week lows against the dollar and euro, as investors await political developments ahead of Britain’s Dec. 12 election. The pound was pushed to a low of $1.2794 on Thursday when the Bank of England’s decision to keep rates constant was not unanimous as had been expected. Two out of nine officials voted to cut interest rates this month and others said they would consider a cut if global and Brexit headwinds did not lift. The pound recovered from Thursday’s losses, up slightly versus the dollar at $1.2819 but overall down by around 1% since the start of the week. Versus the euro, the pound strengthened around 0.1% at 86.18 pence. The Bank of England meeting’s surprisingly dovish outcome did not make a lasting impression on the pound, Commerzbank FX strategist Thu Lan Nguyen said. Labour market data showed that British employers’ demand for staff grew in October at the slowest rate in almost eight years. Nguyen said that the weaker labour data fits into a deteriorating economic picture - along with Brexit uncertainty and weak global growth - which could make the BoE more dovish. Sterling-dollar implied volatility gauges with one-month durations - expiring just before the Dec. 13 election - were down slightly, having more than halved since their peak in mid-October. Moody’s is due to review Britain’s credit rating later in the day. Britain is currently rated Aa2.