The Great Britain pound was the strongest among the major currencies on the Forex market today thanks to comments from a central bank official and hopes for a trade deal between the United Kingdom and the European Union. While the sterling has trimmed its gains by now, it is still trading above the opening level at the time of writing.
Bank of England Deputy Governor Dave Ramsden said that he thinks the BoE does not need to cut interest rates into the negative territory:
For me, I see the effective lower bound still at 0.1 which is where Bank Rate is at present.
He explained that negative rates are “in the toolbox” and the bank “was duty-bound” to explore them as an option to prop up the economy. Ramsden also said that it will take time to engage with banks on the issue of negative rates and in any case the central bank is not planning to implement negative interest rates soon:
We are not about to use them imminently. It will take time to do this work.
Meanwhile, BoE policymaker Silvana Tenreyro was also talking about negative rates on the weekend, stating that the evidence from the economies where they are already implemented “has been encouraging”.
The trade negotiations between the UK and the EU remain a hot topic. While markets were starting to prepare for a possible exit of Britain from the EU without a deal, the latest comments from both British and EU officials were optimistic, giving hope that an agreement is still possible.
GBP/USD rose from 1.2762 to 1.2834 as of 19:28 GMT today, touching the high of 1.2930 intraday. EUR/GBP opened at 0.9099, dropped to the session minimum of 0.9025 intraday, but has rebounded to 0.9090 by now. GBP/JPY traded at 135.38 after opening at 134.62 and rising to the daily high of 136.22.
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