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Sterling up on Northern Ireland deal hopes

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The Pound edged up on Monday amid rumours Britain and the European Union will reach a Northern Ireland deal.


Prime Minister Rishi Sunak is due to unveil a new trade deal on rules relating to Northern Ireland on Monday. The aim of the deal is to resolve tensions stemming from the post-Brexit arrangements in 2020.


Sterling increased 0.36% against the Dollar to $1.1982 after falling close to a two-month low against USD. The Pound is set for its first monthly dip against the greenback since September, Reuters reports.


Against the Euro, the Pound rose 0.1% to 88.21 pence.


“It seems the two sides are set for a landing zone that would allow more flexible trade flows, namely an easing on checks on goods that are just going to NI from the UK,” according to Jeremy Stretch, head of G10 FX strategy at CIBC. “A deal is a mild GBP positive.”


This was echoed by strategists at ING, who said Sterling’s main focus would continue to be the rate hike outlook.


As it stands, money markets forecast a 96% chance of a 25-basis point hike by the Bank of England (BoE) next month, with rates reaching a peak of 4.75% in August, from the current 4.00% level.


In addition, they are pricing in a 57% chance of the European Central Bank (ECB) hiking rates by 50 basis points, and a 43% chance of a 75-basis point rise, the Reuters report adds.


Should the ECB hike rates more than the Bank of England, the single currency may find support against the Pound. However, a stronger Dollar could send Sterling to $1.1850 this week, according to ING.


JP Morgan forecasts the BoE will increase rates by an additional 25 basis points in June as further tightening may be required to curb underlying inflation.

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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.