On Thursday, the British pound was trading lower against the US dollar, currently hovering close to 1.20, as the greenback found some support. The drop in the currency was attributed to the hawkish stance of the Fed officials Kashkari and Bostic, who reiterated the need to fight inflationary pressures and highlighted the tight labour market alongside a robust US economy that can withstand an aggressive monetary policy.
From a UK perspective, the Brexit deal made by the Prime Minister and the EU has resolved trade disputes with Northern Ireland. Senior pro-Brexit individuals have also praised the new concessions, providing a positive outlook for the UK economy. However, the currency remains under the influence of central bank policy.
UK house prices fell by 1.1% in the year to February, the first annual fall since November 2012, according to Nationwide. This was attributed to higher mortgage rates and living costs, making homes less affordable. Prices also slipped on a monthly basis, falling by 0.5% from January, making it difficult for the market to regain much momentum in the near term.
Bank of England boss Andrew Bailey has said that interest rates may need to go up again to control inflation and slow down the cost of living. Although nothing has been decided yet, raising interest rates makes it more expensive to borrow money, causing people to borrow less, spend less, and save more. The next rate decision is on March 23, and Bailey cautioned against assuming that either they are done with increasing Bank Rate or that they will inevitably need to do more.
The pound had initially fallen to 1.1930 earlier this week but has recovered slightly and is now trading close to 1.20. Against the Euro, the pound is down from 1.1370 to around 1.1280. EURUSD is currently residing around 1.06
