Friday 28 May 2021 1:30 pm

Sterling on track for fourth week of gains despite dip against US dollar

Pound sterling dipped against the dollar and the euro today but was on track for multiple consecutive weekly gains versus both, lifted by Bank of England comments on rate hike timing.

The pound was down 0.3 per cent versus the dollar at $1.416 this this afternoon after climbing to $1.422 yesterday. However it was on track for the fourth consecutive week of gains versus the greenback.

Versus the euro, sterling was flat at 1.164 and set for five consecutive weekly gains versus the single currency.

Bank of England rate-setter Gertjan Vlieghe saidyesterday the central bank was likely to raise rates only well into next year, while noting an increase could come earlier next year if the economy rebounds more quickly than expected.

“GBP found some support yesterday in the comments from the BoE’s Vlieghe which were interpreted as having a hawkish tone,” said Jane Foley, Head of FX Strategy at Rabobank.

“This has focused attention on the BoE meeting later in June and whether the BoE is prepared to start focusing on a potential roll-back of stimulus,” she added.

ING analysts noted that Vlieghe laid out three scenarios but the market only reacted to the hawkish one.

Sterling is the second best-performing G10 currency versus the dollar this year, up around 4% year-to-date as investors bet on a quicker reopening for Britain’s economy thanks to its speedy COVID-19 vaccination.