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Sterling Recovers Ground, Hits OneWeek High vs. Dollar

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LONDON, April 14 Reuters Sterling hit a oneweek high against the dollar on Wednesday, recovering some ground after a brief dip the previous day following news the Bank of Englands chief economist resigned.

The pound dipped on Tuesday afternoon, hitting a sixweek low against the euro and extending losses against the dollar after the announcement of Andrew Haldanes resignation.

Haldane was widely seen as one of the more hawkish figures at the central bank, and had been the most upbeat member of the BoEs Monetary Policy Committee on prospects for a sharp economic recovery from the COVID19 pandemic. In February, he likened inflation to a tiger that could easily be roused.

By 0802 GMT, the pound was 0.2 higher on the day at 1.3786, having hit a oneweek high of 1.38 against the dollar.

It was 0.2 higher to the euro at 86.72 pence, off a sixweek low of 87.11 pence hit after the Haldane announcement.

Although a big hawk, his departure shouldnt alter the pounds prospects for the coming months as no imminent BoE tightening was on the table like for the Fed, it is a story for 2023, said Petr Krpata, chief EMEA FX and IR strategist at ING.

The fact that the market pricing of the BoE policy path was largely unchanged yesterday provides a case in point. Plenty of bad news now seems to be priced into GBP EURGBP trades 1.3 overvalued based on our shortterm valuation model and with the UK vaccination programme powering ahead, GBP should recover in coming weeks.

Sterling has been…

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