British Pound Sterling edged lower on Monday, August 14, against a broadly stronger dollar, holding close to the $1.30 level that has proved an anchor for the past month despite a series of negative headlines from the first weeks of Brexit negotiations.
It lost 0.2 percent to $1.2981 by late afternoon in London, while inching higher to 90.78 pence per euro.
The pound reached as high as $1.3267 per dollar on Aug. 3 on a brief surge in expectations that the Bank of England could raise interest rates over the next year.
Banks are divided on the outlook for the pound for the rest of this year, with some forecasting more losses as the economy slows while others argue the worst of the market reaction to Britain’s decision to leave the European Union is over.
Signs that Britain’s pro-European finance minister Philip Hammond was suspending hostilities with “hard” Brexiteers in the cabinet who want a cleaner break from the EU did little to shift prices.
Hammond and ardent Brexiteer trade minister Liam Fox set out a joint position in the Sunday Telegraph that a transition period was needed when Britain leaves the EU, but that single market membership would still end and the interim period would not be used to stop Brexit.
Separately, one of the most vocal pro-Brexit campaign groups launched a campaign to oust Hammond from parliament, saying he was part of a plot to stop Britain leaving the European Union.
But the Bank’s latest meeting and minutes quashed much of that talk in the market and a retreat in pricing on rates has weakened the pound since.
Inflation data on Tuesday and wage numbers a day later should be the centre piece of this week. If inflation rises to 2.7 percent, as expected, it will underline the pain being felt by households whose income is not rising as fast.
A survey released on Sunday showed British employers expect to raise pay only minimally over the next 12 months despite hiring more staff, suggesting wage growth will remain a problem for consumer spending.
JP Morgan analysts recommended selling the pound in favour of the Swiss franc in a handful of new trades sent to clients on Friday.
