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Pound at the top of FX league table

16 Jul 2021

The pound is back in the top spot of the 2021 major currency performance table.

This follows two rate setters indicating that “risk management considerations” could result in the Bank of England (BoE) ending its emergency quantitative easing measures next month.

Sterling was in pole position of the G10 segment of the major currency basket on Friday for the first time since April, surpassing the Canadian dollar.

On Thursday, the Pound-to-Canadian Dollar rate increased over the 1.7380 opening level for the year.

This followed members of the Monetary Policy Committee (MPC) Michael Saunders and David Ramsden – who are also part of the central bank’s rate and policy setting committee - stating that the BoE’s emergency economic support could come to an end sooner than forecast.

According to Jane Foley, head of FX strategy at Rabobank: “The result is that GBP bulls have reason to be shaken out of their inertia.

“The market will have to wait until August 5 for the next BoE meeting, but unless UK economic data start to disappoint, the approach of this meeting is likely to motivate GBP bulls. We retain our EUR/GBP 0.84 end of year target,” she added.

The pound may not have returned to the top spot without the declines in the Canadian dollar, says a Pound Sterling Live report.

“Bank of England (BoE) rate setters Michael Saunders and Dave Ramsden suggested they support an early end to QE in speeches today and yesterday, raising risks of a change in policy at the August meeting,” stated Robert Wood, a UK economist at BofA Global Research.

“Saunders confirmed that in his view the conditions to allow a rate hike - clear evidence of significant progress in eliminating spare capacity and returning inflation to target sustainably - have been met already. All meetings are live now,” Wood continued.