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Forex
The British pound is losing ground to both the dollar and the euro during early Tuesday trading. Sterling managed to recover from the historical lows touched in the aftermath of the mini-budget publication, at the end of September. However, the rebound was in large measure the result of the Bank of England’s decisive action, when it announced its intention to act as buyer of last resort for British gilts, stopping the bond rout and helping to stabilize the currency. However, the £65 billion purchase package will soon come to an end, and the market is once again on the move against British bonds.
The sell-off in gilts is driving the UK’s borrowing costs up and weighing heavily on the pound. As there is no end in view for this dynamic, the pound is likely to accumulate more losses to the dollar and the euro.
Ricardo Evangelista – Senior Analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
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