Despite a change in sentiment inside the Bank of England and emergence of new members which advocate for increase of interest rates, British pound could not use fully the situation and significantly strengthen its position.
After all the upheavals, large players are reviewing their forecasts in the direction of reducing sterling. For example, Barclays, which last week, made a bet on the growth of the pound, now negatively estimate this prospect.
Great pressure on the British currency is exerts the political factor. Parliamentary elections did not give the majority to Teresa May, depriving her of the advantages in the negotiations. And although the Conservatives are negotiating about formation of coalition with the Democratic Unionist Party, it is clear that the Prime Minister’s opportunities will be limited. In this regard, the markets are inclined to the fact that the divorce process of the United Kingdom with the European Union will take place in more soft form. Negotiations with Brussels will begin this week, but important news about Brexit should be expected later.
Today will be a speech by Mark Carney; he is usually more soft and cautious in his statements. Therefore, the speech of the Chair of the Bank of England could lead to a local decrease of sterling, if he voiced concerns about the latest data of inflation and wages, which were worse than expectations.