Sterling fell against the dollar and euro today, retreating from the previous session’s one-month highs, as investors braced for Britain’s beginning the formal process of leaving the European Union next week.
An interview with Bank of England policymaker Gertjan Vlieghe in The Times also laid out the argument for the Bank looking through further rises in inflation over the next few months in aid of supporting the economy.
Strong inflation and retail sales data have added to expectations the Bank of England might lean towards supporting sterling with higher interest rates over the next year, pushing the pound 1 percent higher against the dollar this week.
Investors worry that Prime Minister Theresa May’s invoking Article 50 next Wednesday may trigger a period of political jousting with its EU partners that will lay bare the scale of the risks to the economy from 18 months of talks.
We expect a very volatile week from Monday. Speak to us in regards to your currency requirements beforehand to get an insight on what we expect to happen.