LONDON – The pound edged up against the dollar on Monday, heading for a fifth straight daily gain, its longest unbroken streak so far this year, but volatility was subdued, as investors took a breather from a spate of influential economic data and earnings.
Sterling rose 0.1% to $1.26855, marking a week-on-week gain of 0.7%. Against the euro, the pound lost 0.1% to trade around 85.48.
The pound secured its biggest one-week gain versus the dollar this year last week, boosted by the same swell of risk appetite following blockbuster results from chipmaker Nvidia and upbeat business activity surveys that helped sweep a number of stock markets to record highs.
A number of major data releases are due this week from the United States, the euro zone and Japan, but not much in the way of big UK data which could keep the pound on a fairly even keel for now, according to DailyFX strategist Richard Snow.
“Sterling has performed well over the last week and with little to no ‘high impact’ data on the horizon, the currency may remain propped up on the whole,” he said.
The pound was set for a fifth daily rise against the dollar, its longest stretch of gains since the end of December.
The futures market shows traders widely expect the Bank of England to cut rates in August, with a slim chance of a cut in June.
Investors are banking on the BoE cutting rates by around 60 basis points to just below 4.60% by December, less than half of the 120 bps in cuts that were priced in at the start of this month.
Next week brings finance minister Jeremy Hunt’s Spring Budget. Economists and analysts say there is not much room for fiscal loosening, particularly with a general election due later this year.
“A modest rearranging of the fiscal deck chairs is likely to be the Chancellor’s most effective plan for Budget 2024, alongside a modest support package,” Nomura economists said in a note last week.
(Editing by Bernadette Baum)
