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Pound treads water as Bank of England holds interest rates - YAHOO FINANCE
The pound was little changed against the dollar ahead of the Bank of England’s (BoE) interest rate decision, trading at $1.3418.
Zara Nokes, analyst at JP Morgan Asset Management, warned the escalating tensions and the “upward pressure this is putting on oil prices, will only add to the Bank of England’s concern about easing rates too quickly”.
She said: “The Monetary Policy Committee (MPC) will face a tougher choice when meeting again in August, given the combination of still-sticky inflation and evidence that the labour market is quite clearly cooling.
“A deterioration in the labour market should, in theory, put downward pressure on inflation, but until there are clear signs of this in the hard data, the Bank should be careful not to claim victory over inflation quite yet, not least because of the uncertain geopolitical climate.”
The dollar has strengthened in recent days amid a surge in demand for safe havens over the conflict between Israel and Iran. The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, rose 0.1% to $98.99.
Crucially, the US Federal Reserve left its outlook for interest rates this year unchanged, with its “dot plot” indicating there will be another two cuts.
Meanwhile, in other currency moves, the pound was slightly higher against the euro, trading at €1.1700 at the time of writing.
