LONDON, July 28 — Sterling climbed above US$1.30 (RM5.40) today for the first time in three weeks as investors pushed back expectations for when the Bank of England would cut interest rates below zero.
The pound gained 0.3 per cent to touch US$1.3006, the first time it had broken the mark since mid-September, before pulling back a smidgeon. It was last up 0.1 per cent at US$1.2991.
Money markets pushed back bets that Britain’s interest rates would turn negative, with investors now seeing rates falling below zero in May 2021. Previously they had expected the Bank of England to cut rates into negative territory in March.
The BoE, which cut interest rates to a record-low 0.1 per cent in March, is looking at whether it is technically feasible to cut its main interest rate below zero, something that has already been done in Japan and the euro zone.
The pound was flat against the euro, last trading up a 0.1 per cent at 90.74 pence.
Also supporting the sentiment was cautious optimism towards Britain’s trade talks with the European Union. Most analysts now expecting London and Brussels to reach a deal before the transition deadline.
Still, Prime Minister Boris Johnson’s spokesman said yesterday the two sides needed to work as quickly as possible to reach an agreement by October 15, with fisheries among the sticking points. — Reuters
