06 Oct 2020
The British Pound improved for the first time in three weeks on Tuesday, going over the 1.30 mark after the Bank of England chose to cut interest rates below zero.
Yesterday, Jonathan Haskel, BoE rate-settler noted cutting interest rates below zero would post some risks to the economy as well as others that would serve as a benefit. The BoE previously reduced interest rates to a record-low 0.1% in March. Japan and the Eurozone have made such moves prior to this.
currency strategist at MUFG, Lee Hardman said, “They are still keeping the option open that negative rates could help support the recovery.”
On Tuesday, the Sterling was up by 0.3%, at 1.3006 against the USD. Moreover,
Brexit still remains to weigh on the currency. Commerzbank suggested, “It is in both sides’ interest to come to a deal. However, it is nonetheless uncertain as to whether the negotiations will lead to a deal, as France is now vehemently opposing any concession on fishing rights.”
On the other hand, the American dollar did not see much difference with traders awaiting Washington’s lawmakers’ decision on new stimulus to support the economic recovery.
“Pretty much everybody has given up on the idea that we are going to have a fiscal spend before the election, so then it’s really a matter of how the dollar is going to react post-election,” strategists noted.
Against a basket of six major currencies, the USD was trading in a range of 93.407, falling from September’s two-month high.